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Porsche Balks at ‘Ultimatum’ on VW Merger Agreement (Update2) By Brian Parkin June 27 (Bloomberg) -- Porsche SE supervisory board Chairman Wolfgang Porsche balked at an ultimatum from Volkswagen AG and the state of Lower Saxony to agree on a blueprint for the merger of the two carmakers. A June 29 deadline to agree the corporate marriage that was first reported today in German newspapers is “blackmail” and “damaging” to the companies, Porsche, who is also a major shareholder in the eponymous sports-car maker, said in a statement. “We won’t let ourselves be blackmailed.” Details of an alleged merger plan reported in Focus and Der Spiegel magazines reveal Porsche being forced to sell 49 percent of its shares to VW as a first step to a merger. In a second step, Qatar’s sovereign wealth fund would buy VW shares held by Porsche ahead of a full merger of the two carmakers. Wolfgang Porsche’s confirmation of the ultimatum suggests VW and Qatar are losing patience with the indebted sports-car maker. The shareholder, while struggling to retain influence at VW after failing to win control of the Wolfsburg-based company, may be further sidelined as Qatar and the maker of the Golf car carve out a new shareholder structure. Volkswagen is “annoyed and tired of the power struggle within the company,” Arndt Ellinghorst, a London-based automotive analyst at Credit Suisse Group AG, said in a telephone interview today. “Volkswagen wants integration, but on its terms.” Direct Talks While Porsche has been accumulating stock in VW since 2005 to protect ties in the company, it has become indebted after speculative investments and has taken up talks with Qatar to seek help in plugging a 9 billion euro ($12.6 billion) gap in its finances. Qatar, the world’s biggest exporter of liquefied natural gas, may only vouch financial help after Porsche merges with Europe’s biggest carmaker, said Spiegel, citing no-one. While the emirate and the maker of the 911 sports car are in direct talks on a loan to help plug the company’s net debt, a merger is a condition of Qatar’s help, according to the German magazine. Spiegel said that the shareholder structure of an integrated company would comprise a 40 percent holding by the Porsche and Piech families, 20 percent by Lower Saxony, 15 percent held by Qatar and 5 percent by an unidentified sovereign wealth fund. VW is sending a “‘strong signal” to Porsche, according to Ellinghorst. “It’s saying ‘Lets get it done now -- we’ve a strategic investor in Qatar that supports integration and Porsche needs us both.’” Net Debt Porsche, which owns at least 50.8 percent of VW, also holds some call options that could be converted into about 20 percent of VW shares. Porsche may sell a stake for as much as 2.5 billion euros to Qatar to help reduce its net debt, people familiar with the plan said June 15. Stuttgart, Germany-based Porsche has applied for a 1.75 billion-euro loan from state- owned development bank KfW Group. Spiegel said if Wolfgang Porsche and Chief Executive Officer Wendelin Wiedeking don’t agree to the plan VW will demand a 700 million euro loan repayment made to the sports-car maker, a step that would widen a rift between the two companies’ shareholders and jeopardize Qatar’s investment plan. VW’s chief spokesman Peik von Bestenbostel declined to comment on details in the Spiegel report or on Porsche’s statement, when contacted by Bloomberg by phone today.