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VW, Porsche Merger on Hold

Despite the setback, “all parties remain committed to the goal of creating an integrated automotive group with Porsche and are convinced that this will take place,” VW says.

Concerns about market manipulation in Germany and the U.S. have scuttled Volkswagen’s plan to absorb Porsche by year’s end.

“According to the information currently available, these legal hurdles are no longer expected to be removed in time,” VW says today in a news release.

The planned merger is part of VW’s strategy to position itself by 2018 as the world’s No.1 auto maker, a title that now belongs to Toyota.

Despite the setback, “all parties remain committed to the goal of creating an integrated automotive group with Porsche and are convinced that this will take place,” VW says.

The news comes on the heels of positive earnings reports by both auto makers. Porsche said last month it expects to record a double-digit operating profit this year, thanks to strong demand in China and North America.

In July, VW reported a 59% jump in its second-quarter operating profit. This, in part, prompted Fitch to boost the auto maker’s rating to A- from BBB+.