Volkswagen's Porsche buyout earlier than expected


After three years of toiling around, lots of "You buy us... no no.. You buy us" between the two German brands, Volkswagen is all set to take over Porsche. The deal that was finalised yesterday has been in the making for the last three years, with initial talks starting sometime in 2009.

The deal comes in the backdrop of a lot of confusion over the years. There was news earlier that VW was all set to take over Porsche, but Wendelin Wiedeking, Porsche's former CEO announced plans of taking over Volkswagen with a couple of complex financial manoeuvres which didn't really stick, leading to a situation where Porsche almost declared bankruptcy.

This was back in 2008-2009 and VW came to Porsche's rescue at that time. VW already owns a stake in Porsche and it'll be paying shareholders a total price of $5.61 billion for the 50.1 percent it does not already own. The deal will be classified as a restructuring manoeuvre so as to avoid the $1.5 billion of tax they would've had to pay had they merged or acquired the company. Can't imagine that the German government's going to be very happy about that.

Nonetheless, on August 1st, the 'People's car' manufacturer will take over one of the world’s most exclusive and respected brands. Ironic, isn’t it? But VW is no stranger to managing luxury brands. It has the likes of Bentley, Bugatti and Lamborghini in its stable. The merger will also help VW and Porsche create deeper synergies when it comes to product development similar to the Touareg/Cayenne platform.

Even though Porsche will be a part of the VW Group, expect it to have an individual, independent identity, similar to the likes of Lamborghini and Bentley.