VW-Porche prospective merger talks come to standstill
Two weeks after Europe's largest automaker Volkswagen AG and its smaller counterpart Porsche SE initiated negotiations regarding a prospective merger, the talks have come to a standstill. Volkswagen (VW) said that Porsche, its main shareholder, was "not ready" for the tie-up.
In a meeting that was scheduled for Monday, both the automakers intended working out plans for the merger, with the financial crisis having ruined the profoundly-indebted Porsche's arrangement to increase its VW stake to 75 percent.
Talking about the hold-up in the VW-Porche talks, VW spokesperson Christine Ritz said: "There is currently no atmosphere for constructive talks. We recognized at the end of the week that Porsche is lacking several fundamental conditions for the discussions." In any case, the prospective merger requires the consent of VW's home-state, Lower Saxony, which owns a 20 percent stake in the company.
The hold up in the talks actually resulted from a May 11 statement by VW Supervisory Board Chairman Ferdinand Piech - Porsche and Piech families together control 50 percent of Porsche - in which he said that VW will not help "solve" Porsche's financial problem, and that Porsche should cut its 9 billion euros net debt.
Commenting on the stalled talks, Ferdinand Dudenhoeffer, University of Duisburg-Essen's Director of Center for Automotive Research, said: "War has erupted again between Volkswagen and Porsche. Piech is behind that!"