Porshe Should Cut Debt Before Merging with Volkswagen

Volkswagen and Porshe Talk About Merger

Summary: Volkswagen has urged Porshe to cut its debts and liabilities to pave way for the unification of the two carmaker giants.

In a statement, Volkswagen board chairman Ferdinand Piech said that his company will not solve Porshe’s debt which had tripled in six months, reaching to more than $12.3 billion.

With the ongoing talks for possible merger, sports carmaker Volkswagen urged Porshe to cut its debt to pave way for the unification of the two largest carmakers in the European market.

In an interview with Volkswagen board chairman Ferdinand Piech, he said that his company will not solve Porshe’s debt which had tripled for the past six months, reaching to more than $12.3 billion as of January 31.

Piech said that Volkswagen will not shoulder liabilities and risks of others, calling this decision as logical.

Currently, Porshe owns nearly 51 percent of Volkswagen share. If the merger will succeed, analysts expect that the two carmaker giants will boosts its market viability amid protracted recession which has already hit the US car industry and has forced Chrysler Inc. to file bankruptcy protection.

In October 2008, Porshe has announced its plan to acquire at least 75 percent of Volkswagen share. Since 2005, luxury carmaker has started accumulating shares of Volkswagen to boosts its market viability.

Meanwhile, Piech said no external investor should join the bidding process for a stake, adding that they are making sure every decision is the right one since “taking a wrong step” will undermine all their efforts.

Porshe Should Cut Debt Before Merging with Volkswagen

Volkswagen and Porshe Talk About Merger

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