Corporate Merger between Volkswagen and Porsche

Abstract

Abstract: Volkswagen and Porsche are two firms that are well recognized and established in the automotive industry. Based in Germany, both companies were founded by Ferdinand Porsche in the 1930s and have remained in the Porsche and Piech families to date. There has been contention and rivalry, some fuelled by family differences between the two firms, in 2005, Porsche, the smaller of the two, began a takeover bud that included buying Volkswagen stock. This plan might have worked had Porsche fallen into financial constraint. Volkswagen had to step in with a merger proposal which Porsche fought off fiercely but finally had to give in to because it would mean an infusion of much needed cash into the latter firms fried up coffers. The merger between the two companies, which hit a couple of snags, was finally ironed out in late 2009. This assignment depicts the strategic merger between Porsche and Volkswagen and the factors that caused these two different car companies to come together. One of the main reasons why these companies merged because of Porsche’s engineering expertise which was highly valued by other auto manufacturers in the industry.