In late 2009, Volkswagen announced that it would take a 49.9-percent stake in Porsche AG, with the full merger of the two companies expected to be finalized sometime in 2011. Well, 2011 only has a few more months left, and Volkswagen has officially announced that these plans won't come to fruition in the time frame originally laid out in the merger's comprehensive agreement. Still, both VW and Porsche are committed to making this merger happen, but at this point, it's just unclear when it will happen.

Below is Volkswagen's official release -

Merger of Volkswagen Aktiengesellschaft and Porsche Automobil Holding SE no longer expected within the time frame laid down in the Comprehensive Agreement
Goal of integrated automotive group with Porsche remains unchanged

Wolfsburg, 08 September 2011 - Following discussions with Porsche Automobil Holding SE (Porsche SE), Volkswagen Aktiengesellschaft's Board of Management has reached the conclusion that the planned merger with Porsche SE cannot be implemented within the time frame provided for in the Comprehensive Agreement. Nevertheless, all parties remain committed to the goal of creating an integrated automotive group with Porsche and are convinced that this will take place.

From Volkswagen's perspective, the continuing legal hurdles mean that it is currently impossible to quantify the economic risks of a merger and therefore to perform the valuation of Porsche SE required to determine the exchange ratio. The main causes of uncertainty are the ongoing proceedings and actions brought against Porsche SE in Germany and the USA for alleged market manipulation. According to the information currently available, these legal hurdles are no longer expected to be removed in time. One factor influencing the Board of Management's assessment was an indication by the Stuttgart public prosecutors of the length of time needed for the preliminary investigations.

As the Board of Management believes that the General Meeting resolutions required for the merger of Porsche SE with Volkswagen AG can no longer be adopted by the year-end 2011 deadline stipulated in the Comprehensive Agreement, the remeasurement of the put/call rights in respect of Porsche Zwischenholding GmbH in the financial statements as of September 30, 2011 is expected to lead to a clearly positive contribution to Volkswagen AG's financial result.

In the coming weeks, Volkswagen AG's Board of Management will analyze whether other potential courses of action exist for achieving the goal of creating an integrated automotive group with Porsche in addition to the put/call options laid down in the Comprehensive Agreement. The results of this examination will be presented to the Supervisory Board before the end of the year.

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