"VW and Porsche are entering a new era — the company has the means to become number one," pipping Japan’s Toyota by 2018, chief executive Martin Winterkorn said Friday at company headquarters in Wolfsburg, northern Germany.

Volkswagen, already Europe’s biggest automaker, and Porsche, maker of the legendary 911 sports car, agreed to a tie-up late Thursday after nearly four years of brinkmanship and infighting.

The full acquisition, which will also entail the Gulf state of Qatar taking a stake in Porsche and which VW estimates will produce three billion euros (four billion dollars) in synergies, should be complete by 2011.

It closes an ugly chapter in the history of Germany’s illustrious auto sector that began in late 2005, when two of the industry’s biggest names crossed swords in a duel for control of the empire.

In the beginning, it was Porsche that sought to buy VW in a bid to drive down the average carbon dioxide emissions of its fleet before new European anti-pollution legislation comes into effect in 2012.

VW’s efficient Polo and Skoda models were to offset Porsche’s greenhouse-gas-spewing muscle cars.

Porsche, which already uses VW assembly lines, also aimed to protect its powerful but insular partner against potential foreign investors.

The Stuttgart-based manufacturer tried to acquire 75 percent of the shares in VW but the attempt backfired in May against the backdrop of the financial crisis, which hit the auto market hard and produced a crippling credit crunch.

Porsche, with just 12,000 employees compared to VW’s 360,000 staff, ended up nine billion euros in debt as it built up a controlling stake in VW.

That burden ultimately weakened its own position and the red ink will continue to hurt the company in this fiscal year.

Meanwhile powerful trade union IG Metall and the works council at Volkswagen fought the takeover by Porsche tooth-and-nail.

Hard-charging Porsche chief executive Wendelin Wiedeking inflamed tempers when he said he would go after the "sacred cows" at Volkswagen, where labour has a strong say in the company’s management.

Wiedeking’s bold attempt to take over the much bigger VW also made an enemy of Ferdinand Piech, the fearsome 72-year-old chairman of VW’s supervisory board and a scion of the Porsche clan who holds a major stake in the company.

Piech emerged top dog from a nasty months-long scrap with Wiedeking and Piech’s cousin Wolfgang Porsche, another major Porsche shareholder who had backed the VW takeover bid.

Wiedeking was forced to resign, and Porsche is now to become just one brand in VW’s sprawling stable which also includes Audi, Bentley, Bugatti, Lamborghini, Seat, Scania, and Skoda.

Analysts warned that although the giant company would likely benefit from synergies in the long-run, it could pose a few immediate problems for VW as the economic crisis rages on.

"One problem I see is that too much of the liquidity that Volkswagen still has will be spent on the deal," an automobile industry expert at the University of Applied Science Bergisch-Gladbach, Stefan Bratzel, told the daily Berliner Zeitung.

He said VW needed the cash in the next two years for pressing concerns.

"In that time, VW will have quite a few expenses that we do not know about now. In addition, the group needs to invest heavily in future technology," he said.

Nevertheless, he added, "VW has a strategic size that is extremely important in global competition. That is why I see the future of the company very optimistically."

Porsche buy launches VW drive for world domination

The acquisition by Coca-Cola would have been the largest-ever buyout of a Chinese company by a foreign rival, but was rebuffed in what is sure to be seen as another sign of the protectionism that has been mounting globally as much of the world is gripped by recession.

Observers said China’s ruling on Coke could cut both ways in that Chinese firms that have been making increasingly high profile acquisitions abroad may run into trouble of their own.

Australia’s Foreign Investment Review Board is considering three big investments by Chinese state-run companies in its mining sector.

In particular, political opposition to Rio Tinto Ltd’s planned $19.5 billion tie-up with Chinese state-owned Chinalco has been intensifying, and on Wednesday the Australian Senate said it would launch its own inquiry into foreign investment.

“It indicates that foreign acquisitions of Chinese companies, particularly those with prominent brands, will not be regarded favorably by the Ministry of Commerce,” said Lester Ross, managing partner with the WilmerHale law firm in Beijing.

“And that, conversely, indicates that Chinese companies seeking to make acquisitions overseas may encounter an adverse reaction in those markets, if foreign companies are essentially frozen out of the Chinese market in terms of expansion through acquisition,” he said.

Ross said it was very unlikely the Chinese ministry would have made its decision without higher political clearance and, if that’s the case, “it’s entirely natural to anticipate that other countries will regard acquisitions by Chinese companies in a very similar way.”

COMPETITION

China’s Ministry of Commerce said in a statement the Coke deal would have been bad for competition and Coca-Cola’s changes to the deal were insufficient to allay its concerns, rejecting the transaction under an anti-monopoly law enacted last year.

A Coca-Cola spokesman in Hong Kong did not have an immediate comment, and an official with Huiyuan could not immediately be reached for comment.

JPMorgan analyst Selina Sia said the two companies would have held a combined 40 percent of China’s fruit juice market, and the ruling was not a surprise.

“If Coke were to take over Huiyuan, it will dominate the soft drinks market in China, which not only hurts consumers, but also other sector participants,” she said.

Huiyuan controls more than a tenth of a Chinese fruit and vegetable juice market that grew 15 percent last year to $2 billion. Coca-Cola has a 9.7 percent market share and dominates in diluted juices.

China is Coke’s fourth-largest market and a key battleground with rival PepsiCo Inc.

Jeffery Lau, an analyst with Polaris Capital in Hong Kong, said the ruling confirms that China remains unwilling to allow the takeover of a national brand.

“But this is not exactly a huge surprise. Protectionism has been on the rise everywhere this year,” he said.

TIT FOR TAT?

Last year, after three years of talks, U.S. private equity firm Carlyle Group walked away from a plan to buy Xugong, China’s biggest construction equipment maker, after running into bureaucratic obstacles.

China has itself been snubbed in overseas acquisitions, most notably in 2005 when U.S. political opposition blocked CNOOC Ltd’s $18.5 billion bid for oil company Unocal.

Shares in Huiyuan were suspended from trading earlier on Wednesday after slumping nearly 23 percent following a Financial Times report that Coca-Cola might drop its bid for Huiyuan after Chinese antitrust regulators signaled it would have had to relinquish the Huiyuan brand after the acquisition.

Huiyuan shares had traded below Coca-Cola’s HK$12.20 per share offer price, indicating investors doubted the deal would go through.

China scuttles Coke bid to take over juice maker