Consent required
The deal, however, is still dependent on a sign off by the supervisory boards of the two companies as well as by the union representatives. The consent of the state of Lower Saxony, which controls a sizable stake in Volkswagen, is also required.
The families that have controlling stake in Porsche and Volkswagen have, however, already reached a tentative agreement. Thus, the biggest stumbling block in the union of the two automakers is behind them.
Volkswagen expressed happiness over the consent of the two families and said it, "welcomes the decision by representatives of the Porsche and Piëch family shareholders."
If the deal sees the light of the day, the combined entity will have 10 brands in its repertoire. “In the final structure 10 brands shall stand below an integrated leading company alongside each other, whereby the independence of all brands and explicitly also of Porsche shall be ensured,” Porsche said in a statement.
Reading between the lines, one can infer that Porsche will carry on enjoying a sovereign position within the new entity and therefore the end of the battle of dominance between the largest European car company and the elite sports car company is not imminent.
Consolidation time
The present day economic recession has had other former automobile behemoths down on their knees. Automakers are really struggling in the wake of customers shying away from buying cars.
The global auto industry is, therefore, witnessing a wave of consolidation. Italian car maker Fiat (BIT: F) is taking over the assets of Chrysler to bail the latter out of bankruptcy. Fiat has also showed interest in General Motors Corp’s (NYSE: GM) European and Latin American operations as well as in Swedish car maker Saab Automobile.
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