Volkswagen and Porsche seal £3.6bn merger

Germany’s Volkswagen last night signed a deal to buy the half of Porsche’s car manufacturing operations that it does not already own for €4.46bn (£3.6bn).The two car makers said they had finalised plans to accelerate the formation of a merged group that will see Porsche’s 911 sports car join a VW empire that combines luxury marques Bentley and Bugatti, budget brand Skoda and the MAN and Scania truckmakers.The integration is due to take place from August 1, with VW set to pay Porsche’s holding company €4.46bn and one VW ordinary share for the 50.1pc of Porsche’s carmaking activities that it does not already own.The companies said the quicker than expected integration would generate €320m in net synergies.The deal marks the culmination of drawn-out efforts to bring the two companies together. A proposed merger of VW and Porsche hit the skids in September last year because the pair were unable to quantify the risks relating to Porsche’s failed attempt to buy its much larger rival in 2008.Porsche’s takeover attempt nearly bankrupted the company, triggering lawsuits running to billions of euros from angry investors who claim that Porsche misled the market . Porsche has always rejected the accusations.An alternative attempt to merge threatened to trigger a €1bn tax bill. However, VW and Porsche lawyers finally found a loophole enabling them to avoid tax by classifying the deal as a restructuring, rather than a takeover.