VW Shares Slide Amid Porsche Takeover Troubles

FRANKFURT (AP) -- Shares of Volkswagen AG slid Monday following a report that a plan by Europe's biggest auto maker to buy Porsche could be derailed by hefty tax demands.

The German daily Sueddeutsche Zeitung, citing unidentified supervisory board sources at Porsche, reported that a plan for VW to buy 49 percent of the heavily leveraged sports car maker could trigger tax demands of up to euro3 billion (nearly $4.3 billion).

Neither Volkswagen nor Porsche commented on the report, but both companies saw their shares battered.

Volkswagen shares closed down 5.4 percent to euro236.50, while shares of Porsche Automobil Holding SE fell 6.1 percent to euro48.76 in Frankfurt.

Speculation about the future of Porsche has swirled ahead of supervisory board meetings at both Porsche and Volkswagen scheduled for Thursday.

Over the weekend, German weekly news magazine Der Spiegel reported that Wolfsburg-based Volkswagen would initially buy 49.9 percent of Porsche for some euro8 billion and later take its remaining shares.

Fresh cash is critical for Stuttgart-based Porsche, which ran up billions in debt as it increased its own stake in Volkswagen to more than 51 percent over recent years.

Last month, Germany's state-owned KfW development bank rejected Porsche's application for euro1.75 billion in credit.

According to Der Spiegel's report, the families that own Porsche -- the Piechs and Porsches -- would control 50 percent of the new VW-Porsche group.

The state of Lower Saxony would have a share of 20 percent -- roughly equivalent to its current holding in Volkswagen -- and Qatar would take between 14.9 and 19.9 percent.

Porsche has been in talks with a Qatar investment fund that has offered to buy a stake in the sports car maker.