Porsche and VW merger on the rocks

German car giant Volkswagen has said it is suspending talks with Porsche after agreeing to a merger last week, urging the luxury car maker to decrease its debt.┬á At the heart of the dispute is some Ôé¼9 billion in net debt that Porsche ÔÇö at the time Germany's most successful car maker ÔÇö has racked up while it attempted to increase its stake in VW.┬á Porsche built a 51 percent stake in Volkswagen, and appeared to be in the driver's seat, but as auto markets turned down and credit tightened, Porsche moved instead to merge operations with Volkswagen and forge a 10 brand integrated company, with nine brands owned by VW and the other being the Porsche sports car brand.┬á VW and Porsche own stakes in each other through a complicated family history that unites the two carmakers and the German state of Lower Saxony, which holds a 20 percent stake in VW and can block strategic decisions under the "VW law." ┬á VW chairman Ferdinand Piech is the grandson of Ferdinand Porsche, the founder of the car company that bears his name, and he has a seat on Porsche's board. ┬á Porsche released a statement on Sunday saying that negotiations between the two German car manufacturers "will continue as planned." But Piech strained relations last week by saying that Porsche must trim its debt if the merger was to move ahead. ┬á ÔÇ£We will not be pushed to rush negotiations by anyone ...we need a constructive atmosphere for the necessary constructive talks,ÔÇØ said VW head Martin Winkertorn. ÔÇ£That has not been the case lately. We are not under pressure. All the options and circumstances have to be thoroughly investigated, in order to be able to decide on the basis of facts," the letter read.┬á VW also has accused Porsche of withholding information regarding the true size of its debts and what it expects to see happen if the two companies merge, amid speculation that Porsche is seeking some Ôé¼4- to Ôé¼5 million ($5.4 to $6.7 million) in fresh capital.┬á "For any association between Volkswagen and Porsche, we have to systematically analyze the position of Porsche in order to get a clear picture of the real situation," Winterkorn said in the letter.┬á "We need full transparency of the current situation. It is in the interest of all involved, our workers, shareholders and customers, that we do not risk Volkswagen's financial stability and sovereignty."┬á Porsche employee representatives walked off the job Monday in protest at the proposed combination. Porsche's employee council chief Uwe Hueck demanded that the independence of Porsche continue.┬á "Porsche stays Porsche. VW stays VW. That's the message," Hueck said.