Volkswagen and Porsche Merger: Reasons to Cancel Deal

The proposed Volkswagen (VW) and Porsche merger has been out of the headlines recently, but according to Norway’s sovereign wealth fund, they believe that the deal should be called off, as it is “unacceptable.” They state that the deal cannot guarantee that shareholders will be treated equitably.

Market Watch, who has been watching the events of the merger unfold has said that Norges Bank Investment Management, who manages the Government Pension Fund in Norway has sent a letter to Volkswagen’s supervisory board, the letter in no uncertain terms said that the deal “should be cancelled.”

There is some concern that the merger will fail to ensure that these plans will benefit VW’s shareholders equitably. The deal is to see Volkswagen acquire a 42% stake in Porsche AG, the cost is 3.3 billion Euros, this should take place before the end of 2009.

The deal is just a stepping-stone to 2011; when both companies are due to merge. For more details on why the merger should not go ahead, visit Market Watch.