Gulf state of Qatar to buy 10 percent stake in Porsche

The Gulf state of Qatar will buy 10% of the shares held by family investors in Porsche, the German carmaker said.

The news comes after Volkswagen (VW) and Porsche agreed the details under which they will merge by 2011, ending months of bitter feuding.

As part of the agreement, Qatar will also buy the majority of Porsche’s stock options in VW. Porsche did not say how much Qatar had paid.

Shares in VW dropped 15% to 192 euros, the lowest in over a year.

Porsche shares were 8% higher at 48.50 euros.

Porsche had failed in its long-running attempt to take over VW, despite Porsche building a 51% holding in the company.

Instead, the carmaker ended up saddled with huge debts as it attempted to build up a 75% stake, after the global financial crisis and the slump in the global automotive sector.

Under the terms of the merger agreed on Thursday, VW will initially buy a 42% stake in Porsche by the end of this year for 3.3bn euros ($4.7bn; £2.8bn).

Porsche will now effectively become the 10th brand in the VW family, joining the likes of Audi, Seat and Skoda.

Source: BBC News