Consolidated subsidiaries

Effective January 1, 2010, the Volkswagen Group had acquired all shares of MAHAG GmbH (formerly: MAHAG Münchener Automobil-Handel Haberl GmbH & Co. KG), Munich, to safeguard the presence and sale of its brands, against the waiver of a claim in the amount of €9 million. The acquisition resulted in goodwill of €8 million, which is attributable to the MAHAG Group. The goodwill is not tax-deductible.

To increase its design and development capacity, effective July 27, 2010 the Volkswagen Group acquired 90.1% of the voting rights of the design and development service provider Italdesign Giugiaro S.p.A., Turin, Italy ( IDG ), via Automobili Lamborghini Holding S.p.A., Sant’Agata Bolognese, Italy, a subsidiary of AUDI AG. The remaining shares of IDG were retained by the existing owners. The total purchase price of €180 million includes a put option measured at fair value that was granted to these shareholders on the outstanding shares. In connection with the acquisition, existing contractual relationships held by IDG were terminated in advance by mutual agreement subject to a mutual waiver of the assertion of claims for loss compensation or other claims. The value attributable to these relationships at IDG of €35 million was classified as a separate transaction and recognized as other operating expenses in fiscal year 2010. The total purchase price is calculated as follows:

The merger resulted in goodwill of €72 million, which is attributable primarily to expected synergy effects in the Audi subgroup. The goodwill is not tax-deductible.

In the course of 2010, the Scania Group acquired dealership operations in France, Switzerland and Italy. The purchase price paid amounted to €6 million in total. The acquired goodwill of €1 million was allocated to the Scania Vehicles and Services segment. The goodwill is not tax-deductible.

The following table shows the final allocation of the purchase price to the assets and liabilities of the above-mentioned business combinations:

The gross carrying amount of the receivables acquired was €86 million at the acquisition date, and the net carrying amount (equivalent to the fair value) was €85 million. The depreciable noncurrent assets have maturities of between 18 months and 35 years.

The inclusion of the companies increased the Group’s sales revenue by €609 million and profit after tax by €1 million. If IDG and the business operations acquired by Scania had been included as of January 1, 2010, the Group’s sales revenue before consolidation would have been €95 million higher and profit after tax would have been €3 million higher.

Volkswagen acquired 100% of the trading business of Porsche Holding, Salzburg, Austria for €3.3 billion effective March 1, 2011. Prior to the transaction, the previous indirect owners, the Porsche and Piëch families, had exercised the put option granted by Volkswagen AG. With this acquisition, which was already provided for in the Comprehensive Agreement, Volkswagen has taken another planned step on the way towards an integrated automotive group consisting of Volkswagen and Porsche.

Porsche Holding is an automobile trading company with a strong presence in particular in Austria, Western Europe and Southeast Europe, as well as in China. It sold 626 thousand new and used vehicles in calendar year 2011. Volkswagen is acquiring all automotive operations from Porsche Holding such as the wholesale and retail trading business, Porsche Informatik (IT), Porsche Bank, Porsche Immobilien (real estate) and Porsche Versicherung (insurance), as well as PGA Motors headquartered in Paris. Porsche Holding employs approximately 20,500 people (including unconsolidated companies).

The merger resulted in goodwill of €152 million, which is not tax-deductible.

The following table shows the allocation of the purchase price to the assets and liabilities, which has now been completed:

Goodwill and brand names are allocated to the Porsche Holding operating segment, which is part of the Passenger Cars and Light Commercial Vehicles reporting segment.

The gross carrying amount of the receivables acquired was €2,962 million at the acquisition date, and the net carrying amount (equivalent to the fair value) was €2,753 million. The depreciable noncurrent assets have maturities of between 12 months and 30 years.

The inclusion of Porsche Holding increased the Group’s sales revenue by €5,281 million and decreased its profit after tax net of amortization of hidden reserves identified in the course of purchase price allocation by €64 million as of December 31, 2011. If Porsche Holding had been included as of January 1, 2011, the Group’s sales revenue after consolidation as of December 31, 2011 would have been €984 million higher and its profit after tax would have been €7 million higher.

Porsche Holding’s contingent liabilities were not included in purchase price allocation.

The transfer of Porsche Holding’s trading business increases the consolidated Group by 263 consolidated subsidiaries and three equity-accounted joint ventures and associates.

At the beginning of May 2011, Volkswagen AG increased its holdings of MAN SE ’s ordinary shares from 29.90% to 30.47%. In accordance with German takeover law, Volkswagen was obliged to make a mandatory public offer to all external shareholders of MAN SE to purchase their shares of MAN SE after the threshold of 30% of the voting rights in MAN SE had been exceeded. MAN shareholders tendered 35,857,607 ordinary shares and 164,613 preferred shares to Volkswagen by the end of the acceptance period for the takeover offer on June 29, 2011.After receipt of all official approvals, on November 9, 2011, Volkswagen acquired 25.4% of the voting rights and 2.7% of the preferred shares of MAN SE, Munich, against payment of a total of €3,416 million and, after completion of the mandatory offer, held 55.90% of the voting rights and 53.71% of the share capital of MAN SE. The measurement basis for the goodwill is calculated as follows:

Additionally, transaction-related costs of €16.9 million were recognized directly in other operating expenses.

MAN SE is the listed parent company of the MAN Group, one of the leading European industrial companies in the transport and energy sector, with consolidated sales revenue of €14,675 million in 2010. MAN ’s Commercial Vehicles and Power Engineering business areas supply trucks, buses, diesel engines, turbomachinery and special gear units.

Following the acquisition, Volkswagen AG acquired further shares for €0.3 billion and held 59.58% of the voting rights and 57.33% of the share capital of MAN SE at the end of the reporting period. The difference of €0 million arising from the acquisition of additional shares was taken directly to equity.

The increase in the equity interest is designed to leverage short-term synergies in procurement as well as medium- to long-term synergies from closer cooperation in research and development, and in production.

The shares of MAN, which were accounted for using the equity method until the acquisition date, were revalued at their quoted market value of €2,694 million on acquisition of the majority of the voting rights. The transition from the equity method to consolidation resulted in a noncash book loss of €292 million, which was recognized in the financial result; this includes amounts totaling €48 million that were previously recognized directly in equity and that were transferred to the income statement.

The analysis of the assets acquired and liabilities assumed was not completed by the date of issue of the consolidated financial statements for reasons of time. Preliminary purchase price allocation indicates that the business combination generated goodwill of €575 million, which is not tax-deductible.

The following table shows the preliminary allocation of the purchase price to the assets and liabilities:

€383 million of the goodwill and €1,158 million of the brand names are allocated to the MAN Commercial Vehicles operating segment, which is part of the Trucks and Buses reporting segment; the remaining goodwill of €193 million and the remaining brand names of €470 million are allocated to the Power Engineering segment.

The gross carrying amount of the receivables acquired was €4,291 million at the acquisition date and the net carrying amount (equivalent to the fair value) was €3,821 million. The depreciable noncurrent assets have maturities of between 4 months and 50 years.

The interests attributable to the remaining external shareholders at the acquisition date are measured on the basis of the attributable quoted market value.

The inclusion of the company increased the Group’s sales revenue by €2,644 million and reduced its profit after tax and net of amortization of hidden reserves identified in the course of purchase price allocation by €57 million as of December 31, 2011. If MAN had been included as of January 1, 2011, the Group’s sales revenue after consolidation as of December 31, 2011 would have been approximately €14 billion higher and its profit after tax net of amortization of hidden reserves identified in the course of purchase price allocation would have been approximately €281 million higher.

Potential risks from litigation for which MAN has not recognized any provisions due to the remote possibility of settlement were recognized at their fair value. These relate primarily to Ferrostaal and to the proceedings described in note 34, Litigation.

The acquisition of the majority stake in MAN SE increases the consolidated Group by 134 consolidated subsidiaries and 10 equity-accounted joint ventures and associates.

The shares of Scania AB held by MAN SE increase the share of voting rights in Scania attributable to Volkswagen as from November 9, 2011 to 89.18% (71.81%) and the interest in the capital of Scania attributable to Volkswagen AG to 56.94% (49.29%). The resulting difference of €286 million was recognized in other comprehensive income.

The fair values of the assets and liabilities described above were determined as far as possible using observable market prices. If market prices could not be determined, recognized valuation techniques were used to measure the assets acquired and liabilities assumed.

In addition, three domestic companies that were not consolidated in the previous year and one newly formed domestic company, as well as three newly acquired foreign companies, ten newly formed foreign companies and four foreign companies that were not consolidated in the previous year were initially consolidated. The initial inclusion of these subsidiaries, either individually or collectively, did not have a significant effect on the presentation of the Company’s position. The number of consolidated domestic subsidiaries was also reduced by the merger and liquidation of six companies, while the number of consolidated foreign subsidiaries was reduced by the sale of one company and the merger and liquidation of seven companies.