Volkswagen board moves closer to Porsche merger

German carmaker Volkswagen AG said Friday its supervisory board had approved certain agreement contracts for the planned merger with German sportscar builder Porsche, taking the companies one step closer to completing the deal.

The contracts set out the organizational, structural and legal details of the agreement which was first announced in May and which is hoped to be concluded in 2011.

The next step of the process will be VW shareholders approving that the company take on a 49.9 percent stake in Porsche AG through the issuance of new shares. An extraordinary VW shareholder's meeting is planned for Dec. 3 to take a vote on that issue.

"The creation of an integrated automotive group with ten strong brands follows a compelling industrial logic," VW, based in Wolfsburg, said in a statement.

"It represents a unique opportunity for Volkswagen and is in the best interests of all shareholders. Volkswagen will further expand its position as the leading global multibrand group with the inclusion of Porsche AG and the automobile trading business of Porsche Holding Salzburg."

Volkswagen, Europe's largest carmaker by sales, said last month it would take an initial 49.9 percent stake in Porsche AG, based in Stuttgart. VW said it expects to pay around euro3.9 billion ($5.9 billion) for the stake.

Volkswagen has said it will then in turn buy Porsche SE, the holding company for Porsche AG, for about euro3.55 billion starting in 2011.

Shares of Volkswagen were 1.5 percent higher at euro97, while Porsche Automobile Holding shares were 2.2 percent lower at euro51.73 in Frankfurt morning trading.

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