At its extraordinary meeting today, Volkswagen Aktiengesellschaft's Supervisory Board approved the comprehensive agreement to create an integrated automotive group with Porsche led by Volkswagen. A corresponding agreement has been negotiated by Volkswagen AG and Porsche Automobil Holding SE, as well as the Porsche and Piech family shareholders and the employee representatives of the companies involved. Porsche Automobil Holding SE's Supervisory Board has also approved the concept for the combination of the two companies. The comprehensive agreement seals the creation of a joint group with ten strong brands.??Under this agreement, Volkswagen will initially take a 42.0 percent stake in Porsche AG by the end of 2009, and it will also see the family shareholders selling the automobile trading business of Porsche Holding Salzburg to Volkswagen. The plans will culminate in the merger of Porsche SE with Volkswagen. This is expected to be completed in the course of 2011, and will require the approval of both companies' shareholders. Porsche will remain an independent company headquartered in Zuffenhausen.
The details for implementing the concept will be finalized in the coming weeks. At the same time, negotiations with the Emirate of Qatar to acquire options on Volkswagen shares will continue, and talks will be initiated with Porsche's financing banks to discuss the overall concept. Successful completion of these discussions would be a further key step on the way to becoming an integrated group. Implementation of the agreement is also subject to the standard approval by the relevant authorities.Prof. Dr. Martin Winterkorn, Chairman of Volkswagen Aktiengesellschaft's Board of Management, stated: "Volkswagen and Porsche today took a decisive step towards a joint future. As a group with now ten strong, independent brands we will further expand our unique global position. More than ever before, we now have what it takes to become the automotive industry's number one. Volkswagen is systematically continuing its successful multibrand strategy by integrating Porsche. Additional new growth opportunities will emerge for Porsche under the umbrella of the integrated group. Following constructive talks, we have agreed a solution that reflects the interests of all parties. I am convinced that the outcome of this integration will be the best vehicles for our customers, secure jobs and the creation of long-term value for our shareholders." The integrated group combines sound strategic logic, an attractive financial proposition and social responsibility.
The combination of Volkswagen and Porsche will see the emergence of an integrated automotive group with unit sales of around 6.4 million vehicles and more than 400,000 employees. The key financial figures of the combined company will see a sustained improvement, in particular due to the healthy level of profitability and the expected strong growth of the Porsche vehicle range.
The creation of this integrated group with ten strong brands led by Volkswagen follows a compelling industrial logic: the integration of Porsche AG and the automobile trading business of Porsche Holding Salzburg will allow Volkswagen to further extend its position as the world's leading multibrand group. The integrated group will hold a leading position in terms of global market presence, segment coverage, technology and innovation, global purchasing power and manufacturing base. It offers attractive growth prospects thanks to its superior modular systems, solid financial position, effective management and excellent employees.
Porsche's outstanding technical expertise and its unique legend will enhance the value of Volkswagen's brand family. The product ranges are highly complementary, and adding Porsche will enable a significant expansion of the integrated group's position in the premium segment. With the addition of the development center Weissach, the group's innovation leadership will be further enhanced. Additionally, the integration of Porsche Holding Salzburg's highly profitable automobile trading business will considerably strengthen the Volkswagen Group's distribution activities. Porsche Holding Salzburg has a footprint in 13 Eastern European and five Western European countries, as well as in China, and its pronounced retail expertise already makes it a key partner today for Volkswagen's market success.
Porsche's independence in the integrated group will be safeguarded, in line with Volkswagen's proven decentralized management model. As is the case today with Audi and other successful group brands, Porsche will retain its identity, while at the same time benefiting from its membership of the integrated group. Under the comprehensive agreement, Porsche will be an independent company headquartered in Zuffenhausen, retaining its independent structures. Additionally, Porsche AG's employee representatives will be able to participate in the elections to Volkswagen AG's Supervisory Board following the merger.
Volkswagen's proven management model will enable all potential synergies to be realized quickly. In the long term, this will increase annual group operating profit by a total of c. EUR 700 million.With new, additional models, unit sales of Porsche vehicles will increase substantially. CEO Winterkorn: "We want to write a new chapter in a history of sustainable growth. This will help us safeguard high-quality jobs in Germany for the long term and create new ones."Transaction structure: a fair price and solid financing.
Under the comprehensive agreement, the combination of Volkswagen and Porsche to form an integrated group with ten strong brands under a common group-wide leadership will be achieved in several stages, and is expected to be completed in the course of 2011. Commenting on the overall concept that has been agreed, Hans Dieter Potsch, Volkswagen Aktiengesellschaft's CFO, said: "It combines the greatest possible degree of certainty that the transaction will run smoothly with the creation of a stable ownership structure, a fair price and very solid financing. It also reflects the interests of all parties and safeguards Volkswagen's solid financial position and strong rating."