Volkswagen and Porsche will not merge together due to legal issues according to the German company. Volkswagen’s Chief Executive Martin Winterkorn said that buying out the company’s core sports unit completely is still a possibility.

What has happened so far

Porsche’s sports car segment was indeed sold to Volkswagen back in 2009, for an astonishing €3.9 billion. Volkswagen own 49.9 % of the company. In order to buyout the remaining 50.1 % Volkswagen managed to set up a deal to do so over the upcoming years. A deal between both companies stated that they would gain the approval of shareholders at the end of last year.

A reversal of roles

In what is quite a funny twist to the story, Porsche actually attempted to buy out back in 2008. The move was ill advised as it occurred just as the global recession kicked in, making the move impossible. It was a plan that forced about top management at the company’s profits and reputation fell dramatically. It was thanks to this particular deal that allowed Volkswagen to gain half of Porsche.

Lawsuit number one

One legal issue in question preventing the merger deal from going ahead involves two Porsche executives being sued back in 2010. The reasoning behind the proceedings was due to unfair proceedings involving Volkswagen stock in 2008. The case was eventually dismissed at the beginning of last year but has unfortunately for both companies in essence halted the deal.

Lawsuit number two

The latest lawsuit involves the claimant seeking €2 billion in losses from Porsche’s attempted takeover of Volkswagen back in 2008.

As time goes on the deal is more and more difficult

Europe’s largest car manufacturer cannot buy out Porsche before next year it has emerged. If the buyout does indeed occur, it would cost the company more than what it would have back in 2009. Luxury cars have recently seen a boom in emerging and established car markets such as China, Brazil, North America and India. That particular market is expected to increase this year, meaning the prices of the overall takeover will simply get higher and higher.

 

Will it all worth it in the end? Volkswagen clearly wants to sort the merger deal as soon as possible. Unfortunately they don’t have a choice but to wait until next year.