Volkswagen AG
(
VLKAY
) and sports car manufacturer Porsche Automobil Holding SE have
announced their plans to set up the integrated automotive group
through the integration of Porsche's automotive business, Porsche
AG, into the Volkswagen Group. The integration would be complete by
the onset of August. The plan has been cleared by the relevant
governing bodies of both the companies.
According to the agreement signed in 2009, Volkswagen which already
owns 49.9% of Porsche AG will purchase the remaining 50.1%
stake in the entity. Volkswagen has made an offer of €4.46 billion
($5.61 billion) along with one Volkswagen ordinary share to the
holding company Porsche SE, for the take over. The cash transaction
is based on the equity value of €3.88 billion. The integration will
strengthen both the companies financially.
The integration will add to the existing brands sold by Volkswagen
including Audi, Volkswagen, Seat, Bugatti, Lamborghini and Bentley
along with truck makers MAN and Scania. In addition, realization of
joint projects will lead to growth opportunities for the company.
Porsche SE will receive dividends for its indirect stake in Porsche
AG. It will also book half of the present value of the expected
synergies from the integration, which has been pegged at around
€320 million.
The acquisition of Porsche AG will not only result in a saving of
€700 million ($880 million) along with tax benefits but will also
have favorable effects on its Volkswagen's earnings. However,
charges will offset the operating profits in the current year.
Headquartered in Wolfsburg, Germany, Volkswagen is the one of the
leading automotive manufacturers in the world. The company is
engaged in developing vehicles and engines, production and sale of
passenger cars, commercial vehicles, trucks, and buses. Volkswagen
also offers an array of low-consumption small cars to luxury class
vehicles, along with commercial vehicles ranging from pick-ups to
buses and heavy trucks.
Volkswagen has alliances with
Daimler AG
(
DDAIF
) and Chrysler Group. Currently, it retains a Zacks #3 Rank, which
translates into a short-term (1 to 3 months) "Hold" rating.
DAIMLER AG (DDAIF): Free Stock Analysis Report
(VLKAY): ETF Research Reports
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