Volkswagen agrees to buy rest of Porsche for $5.6bn

Volkswagen says it has agreed a deal to buy the remaining 50.1% stake in Porsche it doesn't already own by the start of next month.

VW will pay 4.46bn euros ($5.6bn; £3.6bn) plus one VW common share to acquire the stake.

The two firms had agreed in 2009 to merge by the end of 2011, but have since faced legal obstacles.

The deal is likely to reduce costs and boost VW's earnings as it seeks to become the world's biggest carmaker.

"The accelerated integration will allow us to start implementing a joint strategy for Porsche's automotive business more quickly and to realize key joint projects more rapidly," said Hans Dieter Poetsch, chief financial officer of Volkswagen.

Both the firms had been seeking to accelerate the merger. However, one of the stumbling blocks for the deal was the likelihood of a big tax bill for both the firms.

Volkswagen had acquired a 49.9% stake in Porsche in 2009.