Porsche boss axed as part of VW tie-up

City A.M. Reporter
PORSCHE conceded defeat in a months-long power struggle with Volkswagen yesterday by axing its embattled chief executive, paving the way for VW to merge with the maker of the 911 sportscar.<br /><br />The luxury carmaker said Wendelin Wiedeking, its chief executive for the past 16 years and Germany&rsquo;s best-paid executive, would leave the group immediately, along with finance chief Holger Haerter.<br /><br />As a way to improve its negotiating position with Volkswagen, Porsche said it would raise at least &euro;5bn (&pound;4.3bn) as the two prepared to create an &ldquo;integrated automotive group.&rdquo;<br /><br />Meanwhile, Volkswagen said in a statement it would buy a stake in Porsche, the company&rsquo;s financially healthy sports car business, and &ldquo;gradually&rdquo; expand this over time.<br /><br />The two companies aim to complete the merger by mid-2011, said Christian Wulff, premier of Lower Saxony, the German state that is Volkswagen&rsquo;s second largest shareholder.<br /><br />&ldquo;I&rsquo;m optimistic that we can lay out the details of our agreement in principle during a supervisory board meeting on August 13,&rdquo; he added.<br /><br />In addition Wulff said the Gulf state of Qatar is set to buy a financial derivatives package that controls 17 per cent of Volkswagen shares, in a further move to ease Porsche&rsquo;s financial woes, and could expand its stake by buying non-voting preferred shares.<br /><br />Porsche amassed over &euro;10bn in debt during a botched attempt to build a 75 per cent stake in VW. Weighed down by the debt, Porsche was forced to abandon further stakebuilding earlier this year and negotiate a merger instead.<br /><br />Porsche&rsquo;s veteran chief executive, Wendelin Wiedeking, opposed a sale of Porsche to Volkswagen, clashing with Ferdinand Piech, the 72-year-old chairman of Volkswagen and grandson of Porsche&rsquo;s founder, Ferdinand Porsche.