David Swallows Goliath: Porsche Buys Controlling Share of VW

(MoneyWatch)  After a prolonged campaign, Porsche today achieved a controlling stake in the Volkswagen Group.

It's a case of a highly profitable David swallowing a troubled Goliath. Volkswagen produced more than 6.2 million cars and trucks in 2007, versus only 101,844 for Porsche, according to the Automotive News Data Center. The two companies have a long history of cooperation, but had always remained separate companies until now.

Besides the iconic Volkswagen brand, the Volkswagen Group also includes the Audi, Bentley, Bugatti, Lamborghini, Skoda and Seat brands.

Porsche acquired an additional 4.89 percent of Volkswagen's shares effective today. That raised Porsche's stake to 35.14 percent of VW, exceeding the 35 percent share necessary to constitute a controlling share.

Porsche CEO Wendelin Wiedeking said his company intends to increase its stake to more than 50 percent. "Today's step is a further milestone along this road," Wiedeking said in a written statement.

Under German corporate law, there are employee representatives of both companies on their respective boards. Differences between the two groups over how they will be represented in the new company have held up the deal. In announcing its takeover of Volkswagen, Porsche said Wiedeking said he was "confident" the two groups could "develop a better understanding of each other's positions."

It is likely to take months for the deal to get antitrust and regulatory approval, Porsche said. Porsche made it official that it would seek majority control of VW, back in March 2008.