A major unit of German automaker Porsche was sold to Volkwagen today, continuing the somewhat drawn-out process of merging the two companies and moving the transaction one step closer to completion.
The transaction may not be fully finalized until a year from now, but the deal is likely to be completed during the first six months of 2011, according to a report from the Wall Street Journal. That paper also reported several tax and legal issues were delaying a more complete integration of the two companies.
According to the Journal, the process started several years ago when Porsche attempted to take over Volkswagen, but this move fell apart when the former company began to accrue too much debt amid the global financial crisis.
A report from the Economic Times said "the sale was a clear sign that the holding's current owners, the Piech and Porsche families, are committed to integrating Volkswagen and Porsche," citing a statement from Volkswagen.
Volkswagen CEO Martin Winterkorn described the Porsche unit purchased as "a highly profitable and efficient sales organization," and added the move will "strengthen [Volkswagen's] distribution network in important markets and regions."
The move is also, experts say, part of an ongoing shift toward consolidation in the auto industry both in the U.S. and abroad. Concentrating sales and manufacturing resources into a smaller number of companies might make business sense, but large-scale recalls by some of the world's biggest automakers have raised questions about the industry's focus. These concerns are particularly strong in the areas of safety and economy, which have an impact on both car insurance rates and fuel efficiency, respectively.