VW shares rise on securing Porsche deal
VW shares rose 5.3 percent and Porsche SE stock was also up 1.3 percent
By CFOWorld staff | CFO UK | Published 14:11, 05 July 12
Shares in Volkswagen and Porsche holding company rose on Thursday after VW agreed to buy the rest of the sports car maker marking the end of a prolonged takeover struggle.
VW shares rose 5.3 percent and Porsche SE stock was also up 1.3 percent as of 0855 GMT, after the companies announced late on Wednesday that VW would pay €4.46 billion $5.9 billion (£3.78 billion pounds) in cash and a single common share to the holding company for the 50.1 percent of Porsche's autos business that it did not already own.
With sales volumes running close to 20 percent above their previous record, Porsche's main challenge is ensuring enough production capacity, and integration with VW may help, analysts said. VW already plans to begin assembling some Porsche models in its own plants.
Europe's largest carmaker has been pushing for rapid integration of Porsche's automotive businesses to generate annual cost savings of €700 million and erase about €2 billion 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 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 US and Germany who accuse Porsche of secretly piling up VW shares during its failed takeover attempt, causing investors to lose billions of dollars.
At a press conference at its Wolfsburg, Germany, headquarters on Thursday the company said it expected the integration of Porsche to be fully ratified by 1 August.
Full consolidation of Porsche's auto-making operations will boost VW's full-year financial result by more than €9 billion and shrink its net liquidity by about €7 billion, the company has said.
Both companies had for months been exploring ways to avoid taxes of as much as €1.5 billion that would have been incurred if VW were to seal the purchase before August 2014.
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