Volkswagen AG — M&A Activity 2009

Aug 13, 2009

News Details

UK Regulatory | 13 August 2009 19:53

VOLKSWAGEN AG: Volkswagen Supervisory Board approves Comprehensive Agreement for an Integrated Automotive Group with Porsche

VOLKSWAGEN AG / Strategic Company Decision

Release of a UK Regulatory Announcement, transmitted by DGAP - a company of
EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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Volkswagen Supervisory Board approves Comprehensive Agreement for an
Integrated Automotive Group with Porsche

• Comprehensive agreement reached: multistage transaction structure,
  completion expected in the course of 2011

• Volkswagen's solid financial base and Porsche's independence
  will be preserved

• High growth, earnings and synergy potential accompanied by job security

At its extraordinary meeting today, Volkswagen Aktiengesellschaft's
Supervisory Board approved the comprehensive agreement to create an
integrated automotive group with Porsche led by Volkswagen. A
corresponding agreement has been negotiated by Volkswagen AG and Porsche
Automobil Holding SE, as well as the Porsche and Piëch family
shareholders and the employee representatives of the companies involved.
The comprehensive agreement seals the creation of a joint group with ten
strong brands.

Under this agreement, Volkswagen will initially take a 42.0 percent stake
in Porsche AG by the end of 2009, and the family shareholders will sell
the automobile trading business of Porsche Holding Salzburg to
Volkswagen. The plans will culminate in the merger of Porsche SE with
Volkswagen. This is expected to be completed in the course of 2011.
Porsche will remain an independent company headquartered in Zuffenhausen.
The details for implementing the concept will be finalized in the coming
weeks. In parallel, talks will be initiated with Porsche's financing
banks to discuss the overall concept. Successful completion of these
discussions would be a further key step on the way to becoming an
integrated group. Implementation of the agreement is also subject to the
standard approval by the relevant authorities.

Volkswagen's proven management model will enable the complete and timely
realization of the potential synergies. In the long term, this will
increase annual operating profit in the group by a total of around
EUR 700 million.

Under the comprehensive agreement, the combination of Volkswagen and
Porsche to form an integrated group with ten strong brands under a common
group-wide leadership will be achieved in several stages.

Following the comprehensive due diligence and valuation process that has
been performed a value of EUR 12.4 billion has been determined for
Porsche AG as a whole, including the expected synergy effects. On this
basis, and after factoring in Porsche's debt, Volkswagen is expected to
pay approximately up to EUR 3.3 billion for the 42.0 percent stake.

To finance its investment in Porsche AG and safeguard its rating,
Volkswagen is planning a capital increase in the first six months of 2010
by issuing new preferred shares. The Supervisory Board will address the
issue and resolve the details in the near future. Such a capital increase
requires the approval of the shareholders, which is expected to be
obtained at an Extraordinary General Meeting by the end of this year.

Another component of the overall concept is that the family shareholders
will sell to Volkswagen the operating business of the separately owned
Porsche Holding Salzburg. An enterprise value of EUR 3.55 billion has
been determined for Europe's largest automobile trade company, with
unit sales of most recently 474,000 vehicles. The trading business can be
sold starting in 2011.

The merger of Porsche SE with Volkswagen AG is expected to be completed
in the course of 2011. The precise shareholder interests following a
merger are not yet final. However, the Porsche and Piëch family
shareholders will remain the largest shareholders at Volkswagen, and the
State of Lower Saxony will continue to be the second-largest shareholder
in the Volkswagen Group in the future.

According to the comprehensive agreement, the status of Lower Saxony will
in future be explicitly anchored in Volkswagen's articles of association.
It is envisaged that Lower Saxony will be entitled to appoint two members
of the Supervisory Board. The existing blocking minority rule will be
reaffirmed - at Volkswagen, key decisions by the Annual General Meeting
require a qualified majority of more than 80 percent of the share capital
represented at the AGM.

Wolfsburg, August 13, 2009

Volkswagen Aktiengesellschaft - The Board of Management
13.08.2009 Financial News transmitted by DGAP

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Language: English
Issuer: VOLKSWAGEN AG
Brieffach 1849
38436 Wolfsburg
Deutschland
Phone: +49 (0)5361 9 - 49840
Fax: +49 (0)5361 9 - 30411
E-mail: christine.ritz@volkswagen.de
Internet: www.volkswagenag.com/ir
ISIN: DE0007664005, DE0007664039
Indices: DAX, Euro Stoxx 50
Listed: Regulierter Markt in Berlin, Frankfurt (Prime
Standard), Düsseldorf, München, Hannover, Stuttgart,
Hamburg; Terminbörse EUREX; Foreign Exchange(s) London,
Luxembourg, SWX
Category Code: ROM
LSE Ticker: VKW
Sequence Number: 238
Time of Receipt: Aug 13, 2009 19:20:08

End of News DGAP News-Service

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