They were forged from the same founder and Porsche has a seat on Volkswagen's board. But the companies are very different in culture. After brushing with bankruptcy in the late 1980s, Porsche is lean, profitable and hard driving. Volkswagen is 14 times larger than Porsche and worker friendly, thanks to an obscure German law that gives the state of Lower Saxony a 20.1 percent stake in the company. Just hours ago, the European Court of Justice struck down this law, paving the way for the sports car maker to become a majority shareholder. Porsche has been quietly buying up VW shares and has arranged a $14 billion line of credit to buy up what's needed to make it the majority owner.
What will a merger mean? See after the jump.
Porsche's chairman Wendelin Wiedeking has declared that he wants Volkswagen to be as big as Toyota--no small feat. His immediate goal will be to grow the company's lost market share in the United States. And this will probably mean lobbing off unprofitable models, such as the Phaeton. It will also mean reducing the influence of VW's 340,000 workers, who are given representation on the board by German law. Those workers have already gone to court to stop Porsche from reducing their representation on the board. It's a safe bet that in the early going, at least, this won't be a happy marriage.
Sources: New York Times, Wall Street Journal, Bloomberg
