Berlin: When Ferry Porsche designed the automaker's first sports car in 1948, he based it on the Beetle his father built for Volkswagen under a contract with the Nazis in 1934.

The Porsche family's connection with state-controlled Volkswagen grew over the years, with scion Ferdinand Piech becoming VW's chief executive officer in 1993.

Then last year, Porsche SE Chairman Wolfgang Porsche, Piech's cousin, backed an effort to try to take control of Volkswagen AG.

The resulting feud may be close to a settlement with board meetings at both carmakers and now it's VW that may end up owning Porsche.

Volkswagen Chairman Piech is winning the upper hand, after Porsche racked up 10 billion euros (Dh52.18 billion) in debt trying to take over VW.

Porsche approved a step needed for a merger at an all-night meeting and wants to sell a stake to a Qatar investment fund. A takeover by VW after that sale would give victory to Piech.

Porsche CEO Wendelin Wiedeking announced his immediate departure on Thursday, accepting a 50 million euro severance package, half of which will go to a charity.

"This will be a huge crowning glory on Piech's career, unifying all the historical links between the companies in a nice, neat package," Tim Urquhart, an automotive analyst with research firm IHS Global Insight, said. "He loves these battles and this is his biggest. He's the kingmaker."

Ferdinand Porsche was Volkswagen's first leader. His daughter married Anton Piech, father of the current VW chairman, and he became a Volkswagen director.

The extended Porsche-Piech family controls all of the sports car maker's voting shares. While Porsche Chairman Wolfgang Porsche, 66, and cousin Ferdinand Piech, 72, were both in favour of a combination of the carmakers for years, they have disagreed over how a pact should come together and now each wants a deal on his own terms.

Piech, who worked his way up through VW's Audi unit to become CEO and then chairman at Europe's largest carmaker, aims to absorb the 911 sports-car maker into the VW empire. That would make Porsche VW's 10th brand in a line-up that includes less expensive models such as Skoda and Seat.

At Porsche, Wolfgang Porsche and Wiedeking had wanted their company to be the acquirer, even though Volkswagen was bigger.

Though Porsche makes fewer cars in a year than Volkswagen does in a week, Wiedeking started in 2005 to accumulate shares in VW and by January Porsche's stake in VW exceeded 50 per cent.

It started to go wrong last year. Wiedeking had pushed Porsche to use borrowing and stock options to finance the purchases, a strategy that backfired when the financial crisis left Porsche short of cash.

Family confrontations also started complicating the deal. Piech made a rare public appearance at a Volkswagen event in Sardinia on May 11, a week after the families agreed to pursue an integrated car company.

He openly criticised Wiedeking and Chief Financial Officer Holger Haerter for creating Porsche's financial problems.

His presence, which wasn't part of the official programme to promote the fifth-generation Polo subcompact, showed that Piech was united with other opponents of Porsche's goal of taking over Volkswagen.

Asked whether he was happy that Porsche's plan had collapsed, Piech said with a smile: "Sometimes one doesn't need to say a whole lot."

Piech, a supervisory board member at Porsche, underlined his resistance to the company's plans by not showing up at a Porsche board meeting on May 18.

"When egos get in the way of decision making, it's not very good," Stephen Pope, global chief market strategist at Cantor Fitzgerald, said. "It's like watching a soap opera."

The feud is a distraction for the carmakers that may lead to "poor decisions", Pope said.

Porsche's supervisory board started early at its meeting in Weissach, Germany, getting underway since Wednesday, two people familiar with the matter said. VW's board met separately in Stuttgart yesterday.

In a statement, Porsche said its supervisory board approved a planned capital increase of at least 5 billion euros. It also said Porsche's supervisory board supports talks to sell a stake to Qatar, provided it is part of a plan to form an integrated car company with Volkswagen. It didn't elaborate.

Porsche announced on Thursday that Wiedeking and Haerter are quitting. Wiedeking will be succeeded by Michael Macht, head of production.

Wiedeking and Haerter see their departure "as a significant contribution to the appeasement of the situation and to support the forming of an integrated car manufacturing company", Porsche said. "Both gentlemen will accompany the handover at the board of management level positively and support their respective successor in their tasks."

Qatar and Porsche's family owners have been asked to participate in the planned 5 billion euro share sale, people familiar with the talks said. Qatar may pay 2 billion euros for a stake, one of the people has said.

"The measure shall create the foundation of building an integrated car manufacturing group with Porsche SE and Volkswagen AG," Porsche said.

At the same time, Porsche may hand over the options that can be converted into a 20 per cent stake in VW to Qatar for free or a nominal amount, the people have said.

Separately, Volkswagen may pay 4 billion euros for a 49 per cent stake in Porsche's operating company, according to the people.

Volkswagen may then acquire the remaining stake within two years in a deal that would value the entire company at about 8 billion euros, according to one of the people.

"As Volkswagen is probably the solution to Porsche's liquidity problems, Mr Piech could be the winner," said Juergen Meyer, a fund manager with SEB Asset Management.