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A Volkswagen spokesman said in overseas reports that Porsche did not seem to have a proper strategy in place for the integration, and must develop a clearer focus on where it was heading.
There is currently "no clear constructive attitude" on the part of Porsche, the spokesman said. "Therefore there is no point in having further talks at the moment," he added. Dialogue between the two parties had been "suspended," he said.
While Porsche stocks plummeted overnight on the news, the company is playing down the rift, saying negotiations “are continuing in a completely normal fashion", but confirming a meeting planned for yesterday had been cancelled.
The two auto giants agreed on May 6 to begin merger talks, giving themselves four weeks to agree a tie-up.
The two sides have been at loggerheads following comments on Thursday by Ferdinand Piech, head of VW's supervisory board. He said Porsche had to cut its debt mountain — valued at roughly nine billion euros ($16.2 billion) — before any merger.
Industry insiders say Wolkwagen is concerned about Porsche’s ability to service the debt – largely borrowed under the direction of Porsche boss Wendelin Wiedeking to buy the VW shares that are now worth a great deal less because of the global economic downturn.
There have also been questions raised at to who would be at the helm in the event of a successful merger, with VW chief executive officer Martin winterkorn tipped for the chair. This leaves the question of whether Wiedeking would be content with a more minor role.
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