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VW and Porsche move towards a merger

Logo of a Volkswagen Phaeton

TEXT OF INTERVIEW

BOB MOON: A merger between two of the world's most famous car companies has moved one step closer to reality. The German automakers Volkswagen and Porsche are now more likely to tie the knot, following a decision by an American court.

With us to discuss is European correspondent Stephen Beard. Good morning Stephen.

STEPHEN BEARD: Hello Bob.

MOON: How could a court ruling in the U.S. allow for a European merger?

BEARD: Ok -- well a group of hedge funds were suing Porsche in the U.S. for more than $ billion. What happened was this: Porsche the relatively small Germany sports car maker was trying audaciously to take over Europe's biggest car manufacturer, VW. Porsche covertly bought shares in VW at a time when many hedge funds were betting that VW shares would go down. The hedge funds lost a bundle, but their lawsuit for damages in the U.S. has now been dismissed and that removes a big obstacle for what is now the planned merger between VW and Porsche.

MOON: I can never figure it out -- I say Porsche you say Porsche. So, in this merger, who's going to be in the driver's seat?

BEARD: Definitely VW is the much bigger group. This battle has been to some extend a personal struggle between the CEO of Porsche and the key executive running VW. I've just been talking to auto analyst Jurgen Pieper in Frankfurt who's been telling me about this battle.

JURGEN PIEPER: It's really a fight for power of two men, if you want. Both are really alpha-persons.

BEARD: Alpha-males.

PIEPER: Alpha-males, absolutely.

He says VW doesn't really need another sports car company, but this merger will at least end this long running battle and swap this rather irritating smaller company that's been bugging it.

MOON: Stephen Beard in London, thanks.

BEARD: OK Bob.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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