Porsche-VW merger

Earlier on Monday, it appeared that a deal would likely be struck this Thursday, when the boards of both Porsche and Volkswagen were expected to sign off at separate meetings on a plan for VW to take over the luxury sports carmaker. Now, that no longer appears to be the case.

"DPA has learnt that the two board meetings on Thursday are unlikely to rule on the rancorous merger battle and that the decision will be delayed until the end of the month," the news agency reported, citing unnamed company sources.

Over the weekend, German media reported that VW had proposed paying 8 billion euros ($11.4 billion) for an initial 49.9 percent share in Porsche, and acquiring the rest at a later stage. The Porsche and Piech family clans that control the two companies would hold 50 percent in the new company, with the German state of Lower Saxony retaining its 20 percent stake and Qatar taking up to 19.9 percent, said reports in Der Spiegel.

Deal also jeopardized by tax bill

Rumours were circulating that the deal was basically done, but on Monday reports emerged that the planned merger hinged on payment of Porsche's 3-billion-euro tax bill associated with the deal. The Sueddeutsche Zeitung cited unidentified members of Porsche's supervisory board, who said that if VW had to foot the tax bill, the deal would collapse. On Monday Volkswagen shares fell by 8 percent following reports that the deal was by no means cut and dried.

Porsche CEO Wendelin Wiedeking had originally mounted a campaign to take over Volkswagen. Porsche reportedly ran up more than 9 billion euros in debt in its attempts to seize control of the Wolfsburg-based company before the tables were turned.

Porsche's employees are enraged over the prospect of the merger, and have threatened industrial action to protect the group's independence. The head of Porsche's works council, Uwe Hueck, has said he would initiate a union takeover of the company's premises to effectively paralyze the sports carmaker.

"VW will never be able to buy the souls of Porsche employees," he told the Welt am Sonntag.

dc/dpa/Reuters/afp

Editor: Susan Houlton