Europe’s biggest carmaker Volkswagen is to pay an estimated 3.3 billion euros for a 42 percent stake in debt-ridden s[prts car makerPorsche. The VW supervisory board has announced its approval of the deal, which is expected to be completed in 2011. The agreement is part of a plan to gradually merge the two car makers into an automotive giant.
The planned combination ends a four-year struggle for control. During that time Porsche garnered 51 percent of VW’s stock, but its failed takeover attempt left it with a debt of more than ten billion euros. VW and Porsche executives believe sales and profitability at the new combined company will eventually help it overtake Toyota, currently the world’s biggest automaker. The completion of the deal depends on the approval of Porsche’s creditor banks.