VW will work toward merger with Porsche

STUTTGART, Germany -- Volkswagen said Thursday it will pursue an eventual merger with Porsche under VW's leadership, vowing that the luxury sports carmaker will retain its independence.

VW, Europe's biggest automaker by sales, said that its supervisory board, the German equivalent to a U.S. board of directors, plans to hold talks with Porsche Automobile Holding "in order to reach a final concept fulfilling this goal."

Volkswagen CEO Martin Winterkorn said the "envisioned merger of Volkswagen and Porsche" followed a "compelling industrial logic and offers many promising perspectives: It makes two strong companies even stronger. "

Volkswagen added that the new company would be achieved by what it called the "step-by-step participation of Volkswagen in Porsche AG," Porsche's carmaking unit, and the subsequent merger of Volkswagen with the holding company that owns it.

The announcement came hours after Porsche Chief Executive Wendelin Wiedeking and Chief Financial Officer Holger Haerter were let go by the heavily indebted company that makes the 911 sports car and Cayenne SUV.

The move — along with the announcement that Porsche will seek to raise funds, possibly from a Qatar investor — is expected to make it easier for Volkswagen and Porsche to merge given that Wiedeking, CEO since 1992, opposed such a move.

"The measure shall create the foundation of building an integrated car manufacturing group with Porsche SE and Volkswagen AG," a company statement said.

Porsche is facing the consequences of a failed takeover bid for much-larger Volkswagen, which led Porsche to incur some $13.8 billion in debt. A merger with VW would raise the possibility of Porsche becoming one of Volkswagen's brands, which include Lamborghini and Bentley.

VW and its chairman Ferdinand Piech have been pushing for a deal that would see it take 49% of Porsche and fold the lucrative luxury-car business into its portfolio, widening its range in anticipation of a recovery in the luxury market. Piech also is part of the family that controls Porsche.