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For three and a half years Porsche tried to take control of the much larger Volkswagen. Finally they gave up on that idea and agreed to a merger instead. This merger is supposed to create an “integrated leading company” which will include VW’s nine brands and Porsche. However, details about the merger are not clear and many believe the deal will end up falling through. Furthermore, after years of quietly buying up shares of VW, Porsche now owns over 50% of the company. These share purchases increased Porsche’s debt levels, and the company is now beginning to show some signs of financial strain.
Porsche is hoping that a merger with VW will help to alleviate some of the company’s pains. Porsche has been trying to expand its brand’s reach by introducing different kinds of cars in recent years. The risk does not appear to be paying off, however, as the introductions of the Cayenne SUV and the Panamera Sedan have actually caused Porsche stock to go down. Therefore, a merger with VW, and its breadth of brands including premium Audis and Italian Lamborghinis, seems a logical step from Porsche’s point of view.
But why does VW want the merger?
It may be that company’s recent losses are creating pressure to do something radical. A merger with Porsche could be an opportunity to become the strongest and largest car company in the world. VW has been striving to overtake Japan's Toyota for a while now.
Most importantly, what will happen to Porsche if the merger goes through? Will it lose some of its glamour or will its Boxster and 911 models remain some of the most desired luxury performance cars in the world? If the merger does go through, these two German manufacturing icons would have the potential create a new entity that will reshape the global auto industry.
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