Further milestone reached on the way towards the integrated automotive group with Porsche

Volkswagen Aktiengesellschaft has on 7 December taken a 49.9 percent stake in Porsche AG. The next important step on the way towards the integrated automotive group with Porsche has therefore been completed, as announced, before the end of the year. The price for the stake is €3.9 billion and is based on the enterprise value for Porsche AG calculated under a careful due diligence and valuation procedure.

Following the Comprehensive Agreement concluded in August, the implementation agreements signed in November and the Volkswagen Extraordinary General Meeting held last week, the stake in Porsche AG represents the next milestone on the way towards the integrated automotive group with Porsche under the leadership of Volkswagen. The acquisition of the trading business of Porsche Holding Salzburg is planned for 2011. The creation of the integrated automotive group is then to conclude with the merger of Volkswagen AG and Porsche SE during the course of the same year.

The combination of the two companies follows a compelling strategic, industrial and financial logic. For the Volkswagen Group, Porsche ideally complements the brand portfolio. The Stuttgart-based car maker will allow Volkswagen to further expand its position in the premium business, which offers particularly strong earnings. In turn, as an independent brand under the roof of the Volkswagen Group, Porsche will have the potential for significant additional growth.

The transaction will have a sustained positive effect on the earnings situation of the Volkswagen Group. With a return on sales of 10.3 percent, Porsche AG is the world’s most profitable automobile manufacturer. Volkswagen will in future participate in this business success through its stake. In addition, the planned integration of Porsche in the Volkswagen Group and the associated closer cooperation will realize significant synergies on both the income and the cost side. As a result, the annual operating profit of the Volkswagen Group is expected to increase by some €700 million in the long term.