Porsche refuses to cede victory to VW in power test

Porsche SE on Thursday refused to cede victory to Volkswagen in a test of wills over who will control the automotive juggernaut the German carmakers aim to forge.

A source close to Volkswagen told Reuters the families had struck a deal in principle that would let Europe's biggest carmaker absorb debt-laden Porsche's healthy sports car business, initially by buying a 49.9 percent stake in Porsche AG.

That would hand victory to VW Chairman Ferdinand Piech, who has been pushing such a deal for months as a way to add a 10th brand to his sprawling automotive empire that ranges from tiny VW models to high-end Bugattis and Lamborghinis to heavy trucks.

VW had won over Wolfgang Porsche, the source said, adding the issue now was persuading Porsche management to go along with a plan that would undercut Wiedeking's authority.

Selling a Porsche AG stake remains an option, Hueck told reporters, but added that he and Wiedeking preferred to strengthen the group's balance sheet by issuing new shares and selling a stake to a Qatari investment fund.

STUTTGART SHOWDOWN

What the Piech brothers and Wolfgang Porsche decide behind closed doors will determine the shape of any deal. The families are contractually obliged to vote together on strategic issues.

Porsche had to abandon plans to take full control of its much larger peer as its debt mounted -- sources told Reuters on Wednesday its net debt has surpassed €10 billion ($14.09bn) just as global car markets collapsed.

That left Porsche with a 51 per cent stake in VW, which agreed on May 6 to enter talks on creating an integrated car group.

Porsche shares rose 3.7 per cent and Volkswagen stock edged up 0.3 per cent by 1432 GMT, lagging a 1.6 per cent gain in the DJ Stoxx European car sector index.

Analyst Heino Ruland from Ruland Research said any deal that let VW buy nearly half of Porsche AG and brought Qatar on board as a big investor would boost Porsche's share price but hit VW.

VW common stock "has been kept on artificially high levels due to takeover speculation and the fact that Porsche cannot afford lower share prices as it would provoke writedowns on its majority stake in VW", he wrote in a note to clients, but he refused to rule out another