Volkswagen’s had wanted to buy 49 percent of Porsche as part of a merger on Monday, but it offer was rejected by Porsche, which said that a sale of the unit would incur a financial penalty that would make the deal impractical.
Deeming the offer ‘unfeasible’ Porsche spokesman, Frank Gaube said that deal was impractival because the sale would mean that the company would have to make a repayment of 12.5 billion euros” on a syndicated loan put together by 15 banks, a financial burden that would render the merger unworkable.
Porsche is already heavily in debt thanks to its acquisition of VW’s shares over a period of time. However, analysts are of the view that the repayment terms could have been worked out by the loan companies if the deal had gone through.
Since Porsche and VW are linked by a common family history and there is bad blood between them, Porsche claims that VW had used pressure tactics and ‘blackmail’ to get the deal through quickly, leading to its collapse.
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