FOLLOWING LAST MONTH'S decision to form an integrated automotive group that combines Volkswagen and Porsche, VW has agreed to take up a 42 percent stake in Porsche.
The shares will cost Volkswagen up to 3.3 billion euros (AU$5.5b). Martin Winterkorn - CEO of Volkswagen - is tipped to run the new corporation.
Winterkorn described the deal as a "new era" for both companies, with Porsche joining Volkswagen's stable of brands that include Audi, Bentley, Bugatti, Skoda, Seat and Lamborghini.
"Porsche is a real enrichment for our company's portfolio," Winterkorn told Reuters.
The boards of Volkswagen AG and Porsche SE are meeting today to discuss the details of the merger, which will include the Gulf state of Qatar buying 17 percent of Volkswagen, making it the third biggest investor in Europe's largest carmaker.
The Porsche and Piech families will retain their positions as Porsche's major shareholders, and Volkswagen's home state of Lower Saxony - which owns 20 percent of VW - will hold onto two positions on the company's supervisory board.
Industry analysts believe that the combined Volkswagen-Porsche entity - which some speculate may revive the 'Auto Union' name - could position itself to overtake Toyota as the world's number one carmaker sooner than Volkswagen's 2018 target.
?This merger implies huge synergies,? Stefan Bratzel, Head of the Center for Automotive Research Institute in Bergisch-Gladbach, Germany, told Bloomberg.
?Together, Volkswagen and Porsche can carve up the world?s car markets.?