Porsche Automobil Holding SE and Volkswagen AG said late Wednesday that they have agreed on a plan for the accelerated creation of the integrated automotive group between the two companies, with the move expected to already take effect as of August 1, 2012.
The plan was approved by relevant governing bodies of the two companies, following the issue of all the requisite advance rulings from the tax authorities.
As a result of the deal, Porsche SE will contribute its automotive business in full to Volkswagen AG, which already holds 49.9% of Porsche AG indirectly. Once the deal closes, Volkswagen will hold 100% of Porsche AG through an intermediate holding company.
In return, Porsche SE will receive cash consideration of around EUR4.46 billion plus one Volkswagen ordinary share.
The cash consideration is based on the equity value of EUR 3.88 billion for the remaining shares of Porsche AG, plus a number of adjustment items including remuneration for dividend payments that Porsche SE would have received from its indirect stake in Porsche AG as well as for half of
the present value of the net synergies realizable from the deal.
Porsche SE will first use the cash to repay the existing bank liabilities of EUR 2 billion. The major portion of the liquidity remaining thereafter shall be used to make strategic investments focusing along the automotive value chain. The company does not plan any extraordinary dividend distributions to its shareholders.
Porsche SE and Volkswagen agreed to merge in 2009 after the maker of the iconic 911 sports car racked up more than EUR 10 billion of debt in a botched attempt to buy Volkswagen. The two scrapped the plan for a full merger last year with the Porsche holding company, which owns 50.7% of Volkswagen's common stock, because of lawsuits against Porsche in the U.S. and Germany.
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