Porsche rejected on Monday Volkswagen’s presentation of a merger proposition to Porsche which would proceed via cross shareholdings, with VW taking a stake of 49.9 per cent in Porsche.

A report said that VW had Porsche currently owns 51 per cent of the shares in VW.

'There is an offer by Volkswagen. For us it is not a practical way,' a Porsche spokesman was quoted as saying in our sister publication, the Gulf Daily News.

In the event of a merger, a credit worth 10.75 billion euros ($15 billion) agreed to by a consortium of banks in favour of Porsche would have to be renegotiated 'right away,' he added.

The plan 'was transmitted to Wolfgang Porsche last week,' but 'it has not been brought to the attention of the Porsche board,' the spokesman said.

Relations between the two carmakers have deteriorated in recent weeks, as well as between the owners of Porsche, the Porsche and Piech families.

Ferdinand Piech, head of the VW supervisory board, and his cousin Wolfgang Porsche disagree on how to get Porsche out of the financial dead-end it finds itself in since buying a majority of VW's shares.

The move was in large part responsible for Porsche's current debt of around 9bn euros.

Piech would like to merge the two companies, while Wolfgang Porsche backs the contested head of Porsche, Wendelin Wiedeking, who wants to keep his company independent, and save his job.

Qatar has made an offer to the controlling Porsche and Piech families. 'We received an offer from the Qatar Investment Authority concerning an investment in Porsche and the purchase of options in Volkswagen stock,' a spokesman for the company said yesterday. – TradeArabia News Service