VW to buy rest of Porsche for €4.46bn Volkswagen has agreed to buy the remaining half of Porsche's carmaking operations that it does not already own for €4.46bn. The two car groups on Wednesday finalised plans to speed up the creation of the combined car group. The integration is set to take effect from August 1 when the maker of the 911 sports car will officially join a stable of VW brands that stretches from luxury marques Bentley and Bugatti to, truckmakers MAN and Scania and low cost carmaker Skoda. A planned merger of VW and Porsche fell apart in September last year because of unquantifiable legal risks associated with Porsche's failed attempt to acquire the much larger VW in 2008. Porsche's takeover attempt nearly bankrupted the company and triggered billions of euros in lawsuits from irate investors who claim that Porsche misled the market. Porsche rejects the accusations. An alternative attempt to quickly combine the two companies threatened to trigger a €1bn tax bill if VW exercised options to buy the remaining half of Porsche it does not currently own before 2014. After months of analysis, VW and Porsche lawyers finally identified a loophole via which the transaction will be classified as a restructuring, rather than a takeover, thereby avoiding tax. The boards of VW and Porsche approved the plan on Wednesday and therefore the integration is poised to happen two years earlier than might otherwise have been the case. German politicians criticised the tax-avoidance move when reports of the potential scheme emerged last month. However, Martin Winterkorn, VW chief executive, said the accelerated integration was "good for Volkswagen, good for Porsche and good for Germany as an industrial location." VW is set to pay the Porsche holding company €4.46bn and one VW ordinary share for the 50.1 per cent of Porsche's carmaking operations that it does not yet own. The cash sum is based on an equity valuation of €3.9bn for the remaining Porsche shares, plus several adjusted items. The companies said the faster than expected integration would create €320m in net synergies which would be split equally between the two companies. Hans Dieter-Pötsch, VW chief financial officer, said the integration would enable VW and Porsche to "concentrate fully on their operating business by making day-to-day co-operation much simpler." The two companies already co-operate in several areas but are forced to do so at arm's length, incurring additional costs and foregoing synergies. As a result of the revaluation of its Porsche shares, VW is set to benefit from a more than €9bn non-cash effect in its financial results. VW's €15.8bn cash pile will, however, decline by about €7bn because of the cash payment to Porsche and the consolidation of Porsche's negative net liquidity of €2.5bn. Following the transaction, the Porsche SE holding company's primary asset will continue to be its 50.7 per cent equity stake in VW. Porsche will use part of the cash to repay €2bn in bank liabilities and the rest for future investments. However, legal risks linked to the lawsuits brought by US and German investors remain. Matthias Müller, Porsche chief executive, insisted that Porsche be a "financially strong holding company with attractive potential for increasing value added."