By Andreas Cremer
Nov. 20 (Bloomberg) -- Volkswagen AG’s supervisory board signed off on contracts for its takeover of Porsche SE in stages, clearing the way for Europe’s largest automaker to add the 911 sports car to its model lineup.
The company’s supervisory board approved contracts of implementation relating to the comprehensive agreement with Porsche, it said in a statement on its Web site. These contracts “specify the binding provisions governing the organizational, structural and legal details of the union between the two companies,” it said. Porsche will meet today to discuss the contracts, it also said.
The approval of legal merger documents will allow Volkswagen to proceed with buying Porsche’s automaking division. The Wolfsburg, Germany-based carmaker said on Oct. 20 that it will pay 3.9 billion euros ($5.8 billion) for a 49.9 percent stake in the Porsche unit by the end of this year in the first phase of a combination to be completed by 2011.
Porsche’s supervisory board, including members of the Porsche and Piech families that control the Stuttgart, Germany- based company, plans to meet in Wolfsburg, also to approve the contracts, said Albrecht Bamler, a spokesman. Ratification will allow Volkswagen Chief Executive Officer Martin Winterkorn to run Porsche’s holding company and Chief Financial Officer Hans Dieter Poetsch to take a seat on the management board.
“Volkswagen is moving forward in its quest to become No. 1 in global auto building,” said Stefan Bratzel, head of the Center of Automotive Research Institute in Bergisch-Gladbach, Germany, before the VW board met. “This merger implies enormous synergies.”
Four-Year Feud
Winterkorn has a target for VW to overtake Toyota Motor Corp., the world’s biggest automaker, in deliveries and profit margins by 2018. Porsche will become the 10th brand at VW, which also owns the Audi luxury division in Germany as well as sports- car maker Lamborghini in Italy and Crewe, England-based Bentley.
Volkswagen and Porsche agreed in August to merge, ending a four-year feud for control. The combination involves an investment by Qatar, which has bought 10 percent of the voting rights in Porsche and will eventually own 17 percent of the merged carmaker.
The settlement was reached after debt at Porsche tripled to more than 10 billion euros in six months following the company’s failed takeover of Volkswagen. Porsche owns 53 percent of Volkswagen common stock, which carries voting rights.
‘Milestones’
“The multi-stage process is to culminate in the merger of Volkswagen AG and Porsche SE during the course of 2011,” Volkswagen said in the statement. “The next milestones are a 49.9 percent participation of Volkswagen in Porsche AG which is planned for realization by the end of 2009.”
Volkswagen will ask shareholders on Dec. 3 to approve a sale of preferred stock to help finance the Porsche purchase. Investors will vote at an extraordinary meeting in Hamburg on authorizing the sale of as many as 135 million shares over the next five years. Qatar said on Nov. 9 that it was reducing its holding of the preferred shares.
Porsche had a pretax loss of 4.4 billion euros in the 12 months through July 31 after writing down the value of options on Volkswagen shares. Full-year revenue fell 12 percent to 6.6 billion euros. The company is scheduled to hold a news conference on Nov. 25 in Stuttgart to give details on fiscal- 2009 figures.
Volkswagen’s supervisory board will discuss a possible purchase of assets from insolvent specialty carmaker Wilhelm Karmann GmbH when it reconvenes at 9 a.m., two people familiar with the situation have said.
Negotiators for VW and Karmann failed in previous meetings to narrow the gap between the minimum 55 million euros that Osnabrueck, Germany-based Karmann is seeking for assets including assembly halls, production facilities and a paint shop and the 35 million euros that VW has indicated it may be willing to pay, the people have said.
To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net.
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