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Porsche CEO steps down, making way for VW merger

July 24, 2009|Associated Press

STUTTGART, GERMANY — Volkswagen turned the tables Thursday on Porsche, saying it planned to put the luxury sports car maker under its umbrella through a merger while preserving the brand's autonomy.

The decision came just hours after Porsche Automobil Holding dismissed longtime Chief Executive Wendelin Wiedeking and Chief Financial Officer Holger Haerter.

The two had failed in a David-and-Goliath bid to acquire much larger Volkswagen, Europe's biggest automaker by sales, and their departure cleared the way for a merger with VW.

Wiedeking and Porsche built a 51% stake in Volkswagen, but loaded Porsche with debt just as the economy turned sour. Now Volkswagen is in the driver's seat and cash-strapped Porsche could wind up as one of its brands along with names such as Lamborghini and Bentley.

Volkswagen CEO Martin Winterkorn said the "envisioned merger of Volkswagen and Porsche" followed "compelling industrial logic and offers many promising perspectives: It makes two strong companies even stronger."

The two companies already cooperate on making sport-utility vehicles, and Winterkorn said "Volkswagen and Porsche have excellent expertise and can use their resources together even better."

Winterkorn said a Qatar investment fund would acquire 17% of Volkswagen, becoming its third-largest investor. VW and Porsche are expected to work on the integration in the next three weeks, with the possibility of completing it before the end of summer.

Volkswagen of Wolfsburg, Germany, said in a statement released after a lengthy meeting by its supervisory board, the German equivalent to a U.S. board of directors, that it planned to hold talks with Porsche "in order to reach a final concept fulfilling this goal."

Volkswagen added that the new company would be achieved by what it called the "gradual involvement of Volkswagen in Porsche" and the subsequent merger of Volkswagen with Porsche Automobile Holding.

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