AP reported that Volkswagen is sticking with its planned merger with Porsche despite serious legal and tax hurdles as it reported profits jumped to EUR 3.2 billion in the fourth quarter.

The complex merger, in which Porsche would become one of Volkswagen's 10 brands, was supposed to take place this year but has been held up by German prosecutors' investigations of suspected market manipulations at Porsche and a lawsuit in the US.

Mr Martin Winterkorn CEO of Volkswagen said that "The deal is taking ever clearer shape. The preparations are going according to plan, Volkswagen stands as before behind the basic agreement and the merger with Porsche. However, there are still not insignificant tax and legal hurdles to overcome."

Porsche initially tried to take control of Volkswagen but ran into financial difficulties, and Volkswagen turned the tables with a merger deal that puts it in the driver's seat.

Volkswagen now owns 49% of Porsche's car making operations, and has an option to buy the rest. It is holding off completing the deal with Porsche's holding company, a different entity, while German prosecutors investigate suspected improper share dealings at Porsche, and the full merger may not be completed this year.

Meanwhile, Volkswagen's net profit for the fourth quarter was boosted by an expanding global auto market that lifted sales in the United States, Europe and especially China. The fourth quarter figure compared with EUR 257 million in net profit from the same period in 2009. Revenues rose by 22.5% in the quarter from a year earlier to EUR 34.33 billion.

(Sourced from Associated Press)