PORSCHE AND VW AGREE MERGER

Volkswagen and Porsche yesterday announced they were to merge in a move that would turn Europe's largest carmaker into a family-controlled company and end a 3½ year takeover saga.

After a meeting of Porsche family owners and executives from both car companies in Salzburg, the billionaire family clan agreed to create an “integrated car-manufacturing group” with 10 marques united under one roof. The expanded group would be a truck and car powerhouse boasting well-known marques such as Porsche, Audi, Volkswagen and Bentley.

The move, which has still to be approved by all VW's shareholders and the companies' powerful works councils, would integrate Porsche beside the nine existing brands of the Volkswagen group and brush aside longstanding hopes of the sports carmakers' management to dominate Europe's largest carmaker.

It would also create another big family-dominated carmaker in Europe alongside the Quandt-controlled German luxury carmaker BMW, Agnelli-held Fiat in Italy and France's Peugeot Citroën PSA group.