Porsche, Volkswagen merge over feud

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Renita Jablonski: The urge to merge continues in the car industry. Volkswagen and Porsche have agreed to unite. From the European desk, Stephen Beard reports.

Stephen Beard: The agreement ends a family feud. Wolfgang Porsche, chairman of the sportscar company, fought a long campaign to take-over Volkswagen.

Volkswagen is run by a relative, a grandson of Ferdinand Porsche, the man who designed the Beetle. The sports car company borrowed around $12 billion to buy a big stake in VW. Buckling under that debt it’s now dropped its takeover aim. It’s agreed to merge with VW instead. The deal, if it goes ahead, will unite some powerful brands. Porsche,Volkswagen, Audi, and Bentley.

Analyst Jurgen Pieper in Frankfurt says it makes good commercial sense:

Jurgen Pieper: Porsche by far the most profitable car maker at all. And Volkswagen in the past two years has become the leading manufacturer in Europe,at least. And I think this is will be a good fit.

There is one possible source of friction in the proposed new company. It is still not entirely clear which branch of the Porsche Family will be in the driver’s seat.

In London, this is Stephen Beard for Marketplace.