Volkswagen agrees deal to buy Porsche

Volkswagen has agreed a deal to buy the remaining 50.1% of Porsche that it didn't already own. VW is set to pay 4.46 billion euro for its fellow German carmaker, which amounts to £3.6 billion.

Under a 2009 agreement, Volkswagen and Porsche had already laid out plans to merge by the end of 2011 but legal issues delayed the process. One of the key stumbling blocks was the likelihood of a giant tax bill for both firms, amounting to nearly 1 billion euro, if the deal took place.

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Volkswagen purchased a 49.9% stake in Porsche in 2009, signaling its intent to take over the company that had for a long time been positioning itself to take over Volkswagen. This dramatic role reversal came about as a result of the global financial crisis and an accompanying slump in the automotive sector.

As the economic climate changed, the debt that Porsche had incurred in trying to raise the funds to buy Volkswagen became an increasingly heavy burden. This opened the door for Volkswagen's 2009 takeover move, which has now come to fruition.

Where does this leave these two giants of the global car industry? In recent years, predominantly through its premium Audi, Bentley and Lamborghini brands, the VW Group has been highly active in the market sectors where Porsche competes.

The two brands have already collaborated on their luxury SUV products with the Porsche Cayenne, Volkswagen Touareg and Audi Q7 family of models sharing engines and platform technology. With Porsche set to move under the VW Group umbrella, this could force some significant realignment in the way these upmarket VW Group brands operate in certain sectors of the market.

What will be the future for models like the Audi R8, a direct competitor for Porsche's 911, and Porsche's potentially Lamborghini-troubling 918 Spyder post-takeover? Let us know your thoughts on Volkswagen's purchase of Porsche in the comments section below...

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