The long-awaited merger between Porsche and Volkswagen may not happen until next year, the sports car-maker warned yesterday, after German prosecutors widened their investigation into the embattled company.
The tie-up between Porsche and VW was first mooted in mid-2009, in the aftermath of Porsche's botched attempt to buy its larger rival earlier in the year. That deal foundered on the company's €9bn (£7.7bn) debt pile and was only salvaged by morphing into merger talks.
The run-in with German authorities goes back to 2008, when Porsche made the surprise revelation that it held an extra 32 per cent of VW stock, on top of its known 43 per cent holding.
This sent the share price rocketing by 400 per cent, as hedge funds holding Germany's most-shorted stock tried frantically to close their positions. Investigators into the fiasco are now expanding their inquiry to include allegations that the former Porsche chief executive Wendelin Wiedeking and the finance director Holger Härter took excessive risks.
"There is suspicion that former board members took existential risks for the company by doing share price hedging deals in connection with the attempt to take over Volkswagen," a spokeswoman for the Stuttgart-based prosecutor said yesterday.
Mr Wiedeking and Mr Härter, who both left the company in mid-2009, have consistently denied any wrongdoing.
Porsche had aimed to have the deal completed this year, creating an automotive giant controlling 10 different marques, including Seat, Bentley and Audi. But the extended investigations are unlikely to be completed before 2012, according to the prosecutor's office yesterday.
The widened investigation could also threaten Porsche's plans for a €5bn rights issue this year, designed to pay down its debts in the run-up to the VW deal.
The company is also facing legal action in the US, where a slew of hedge funds are appealing against the court's dismissal of their $2bn (£1.2bn) damages claim following the price spike in 2008.
Shares in Porsche dropped by more than 12 per cent in afternoon trading.