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VW, Porsche shares gain on tie-up plans


VW, Porsche shares gain on tie-up plans


Volkswagen’s shares jumped on Thursday following its agreement to buy the remaining half of Porsche. The sports car maker’s shares also rose.

Completing the purchase – at a cost of 4.46 billion euros – ends a long saga.

The protracted takeover struggle sparked high-profile family feuds and lawsuits from investors.

“We’re wrapping up one of the most significant projects in the automotive world,” VW Chief Executive Martin Winterkorn told reporters at the group’s Wolfsburg headquarters.

“Together we are more capable than ever of becoming the best auto company on the planet,” he said, adding that VW was poised to invest “massively” in new shared technologies and production.

Joint projects already underway include Porsche’s next model, the Macan compact SUV, due for a 2014 launch.

Porsche’s high level of sales means it needs additional production capacity and VW plans to begin assembling some Porsche models in its own plants.

“VW is getting a good deal,” said London-based Morgan Stanley analyst Stuart Pearson, predicting in a note to investors that its completion would lift VW earnings by six percent next year. “Porsche is the world’s best premium car story,” he said.

Europe’s largest carmaker has been pushing for rapid integration of Porsche’s automotive businesses to generate annual cost savings of 700 million euros and erase about two billion euros of debt at the sports car maker’s holding company.

Porsche and VW agreed a merger in August 2009 after the maker of the iconic 911 sports coupe racked up more than 10 billion euros of debt attempting to buy VW, pitting the Porsche family against the rival Piech dynasty.

VW had abandoned the earlier merger plan last September, citing unquantifiable legal risks from lawsuits filed by short-sellers in the United States and Germany who accuse Porsche of secretly piling up VW shares during its failed takeover attempt, causing investors to lose billions of dollars.

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