German carmaker Volkswagen has warned sports car maker Porsche on Monday that it would have to do a better job of explaining its finances to ensure talks on the merger could proceed. Analysts see this as a sign of the talks being in trouble.
In a veiled reference to Porsche's troubled finances, Volkswagen chief executive, Martin Winterkorn said in a letter to employees that 'absolute transparency' was required to systematically analyse the starting point to combine Volkwagen and Porshe. He added that it was in the interests of all concerned to ensure that there was no real threat to Volkswagen's financial stability and autonomy.
On Sunday, Volkswagen canceled the working group responsible for hammering out the details of the merger saying the atmosphere was not conducive for the process.
On Monday, the Volkswagen chairman, Ferdinand K. Piëch, unexpectedly skipped a meeting of the Porsche supervisory board, of which he is a member. This was played down by a spokesman who said that the Piech remained in contact with the members of the Porsche family. Wolfgang Porsche, Piech's cousin heads the Porsche board.
According to VW spokesman Michael Brendel it was still uncertain when the talks would resume.
Analysts point out that Porsche is more keen on finalising the deal given the sports car maker with a value of about 7.2 billion euros, or $9.7 billion reported a debt of 9 billion euros on its way to acquiring 51 per cent of Volkswagen. Last year, the company used so called cash-settled options contracts to gain voting rights to an additional 20 per cent or more.
Porsche is also under investigation of the German securities watchdog BaFin in connection with its transactions.
In his letter Winterkorn has said that Volkswagen would not be pressured. ''We are not in any hurry,'' he said. ''All the information and options must be thoroughly examined and a decision subsequently taken on the basis of the facts.''
Meanwhile, thousands of Porsche workers demonstrated Monday to protest the deal they fear would lead to job cuts. Uwe Hück, a labour leader said in a statement that he had been given assurances that the owner families were strong enough to guarantee Porsche's independence. Hueck called on workers to remain ''self-confident'' as Porsche was struggling with €9 billion euros debt.
''Porsche will remain independent, Porsche has to remain Porsche,'' Hueck told employees at the carmaker's research and development center in Weissach, Germany.
The Porsche and Piech families, who together own half of the Stuttgart-based Porsche had agreed on 6 May to create and 'integrated' carmaker that would put Porsche alongside VW brands including Audi and Skoda.
Talks between the automakers to thrash out details of the merger have failed to make any headway following Piech's 11 May remarks and after Bernd Osterloh, Volkswagen's works council chief asked to quit negotiations.