VW reiterates plan to merge with Porsche

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The head of Volkswagen reiterated Thursday his intention to merge Europe's biggest carmaker with Porsche but said the luxury sports car company had to resolve its financial problems first.

"Alliances and partnerships are an important instrument" as the group works towards becoming the world's biggest car maker by 2018, VW boss Martin Winterkorn said during an annual press conference.

And his intentions towards Porsche "have not changed," Winterkorn added.

VW owns 49.9 percent of Porsche AG, the company that builds the iconic 911 sports cars, and it wants to acquire the rest to make it the group's 10th brand alongside Audi, Bentley and Lamborghini.

Integrating Porsche would help VW achieve economies of scale and provide access to handsome profits from Porsche's operations.

But Porsche must improve its overall financial situation first, the VW boss stressed.

"A first step towards a merger was taken with the purchase of Porsche Holding ... the next is a Porsche capital increase," Winterkorn said.

VW bought Austria-based Porsche Holding earlier this month for 3.3 billion euros ($4.5 billion).

That money is to be used by the Porsche and Piech families to take part in a capital increase aimed at cutting the debt of six billion euros that Porsche Holding racked up during a failed attempt to take over the much larger VW in 2008.

A five-billion euro capital increase is supposed to take place by the end of May, though it could be pushed back until the end of August.

A full merger might be delayed until 2012 owing to legal proceedings against two former Porsche executives in connection with the failed takeover attempt.

Meanwhile, VW also plans to build a strong heavy truck unit with stakes it owns in the Scania and MAN brands.

That division "is a strategic activity for Volkswagen," Winterkorn said, and recorded a 50 percent increase in sales last year.

© 2011 AFP

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