IN BERLIN:IT'S IMPOSSIBLE for visitors to ignore the weight of history as they enter the iconic Volkswagen plant in the western Germany city of Wolfsburg.
Without Volkswagen, there would be no Wolfsburg, nor would there be the 1.6sq km of red-brick factories, large enough to contain the principality of Monaco.
This is the world's largest motor factory, producing 4,000 cars a day and linked by 75km of road, 70km of railway, and its own canal for good measure.
But seven decades after it was founded by the Nazis, VW's days as Europe's largest independent car maker are numbered. Early next year it is likely to be swallowed up by a holding company created by its majority shareholder, Porsche of Stuttgart.
It is the final chapter in a saga packed with intrigue, fast cars, high finance, family feuds, back- stabbing, and - in a twist no soap- opera writer could dream up - a baby monitor used as a snooping device. But more on that later.
The Porsche takeover is not just a David and Goliath corporate battle - the sports car company is absorbing a company with 28 times as many employees - but a compelling family drama between the two wings of the Porsche family who between them have 100 per cent control of the luxury car maker.
The current wrangling is a long way from seven decades ago when production started in Wolfsburg on the Volkswagen - literally "people's car" - designed by German engineer Ferdinand Porsche. Work had scarcely got under way on turning the Nazi commission into a mass market phenomenon when Hitler marched into Poland and the second World War began.
The plant was turned over to armament and aircraft production. It wasn't until the defeat of the Nazis and the takeover by British occupying forces, that the car, later dubbed the Käfer or "Beetle", began rolling off the conveyor belts in significant numbers.
By the time Ferdinand Porsche returned to the Wolfsburg plant in 1950, a year before his death, more than one million of his VW Beetles had been produced. Porsche's own sports car firm revved into life in the 1950s with the founder's son Ferry at the wheel.
The two companies retained loose but friendly ties with VW over the years, thanks in particular to an ambitious young engineer called Ferdinand Piech, grandson of the Porsche founder.
A tall, ascetic man with a fearsome reputation, Piech left the family firm and went to work for Audi in 1972 and later Volkswagen, becoming chief executive in 1993.
His vision of uniting the two companies began with Porsche and VW co-operating on research and development; then VW used its greater production capacity to build parts for Porsche vehicles.
The prospect of a full merger arose in 2005, when Piech, now chairman, suggested it was better to join forces than allowing either company to fall victim to speculative investors. VW unions welcomed Porsche as a White Knight, but as its shareholding grew and talk of merger gave way to takeover talk, the temperature dropped and the battle began.
The first indication of Porsche's intentions came with the creation of a new holding company with combined sales of about €120 billion selling 6.7 million vehicles a year. Volkswagen unions were aghast at the holding company structure that gave them the same number of representatives at the top table as Porsche workers.
"For us this is about our 360,000 employees having the same rights as the 11,000 Porsche workers," says Bernd Osterloh, the influential head of VW works council, who is leading a court challenge to the deal.
Osterloh sees a fundamental culture clash between Porsche and VW. Like the cars it produces, the Stuttgart-based company is a lean, mean capitalist machine.
Volkswagen, on the other hand, has been run for half a century on a model of management-worker co-determination in its factories in Germany and worldwide, from Poland to Mexico. It is less profitable than Porsche, but has weathered the ups and downs of the past half-century.
"We have shown that economic success and labour interests are of equal importance," says Osterloh.
Unions in Wolfsburg are concerned at plans by Porsche to drain VW of its reserves, leaving it ill-equipped to weather the tough economic times ahead. Add to that worries about the future of VW subsidiaries such as Audi and Lamborghini, which could be perceived as competitors to Porsche's own cars.
The Wolfsburg unions may be holding a losing hand, though. Special laws that protected the company from takeover are being dismantled by degrees by EU commissioner Charlie McCreevy.
The atmosphere between Porsche and VW has been deteriorating since the VW annual shareholder meeting in April, when Porsche representatives were elected on to the VW board for the first time.
Just how poisonous relations really are emerged days later with a report that Porsche chief executive Wendelin Wiedeking had found a baby monitor - switched on and hidden - in his hotel suite when in Wolfsburg in November 2007. He contacted the police and has reportedly identified the culprit within VW.
On the family front, the already poisonous mood between the Porsche cousins turned toxic in September when VW chairman Ferdinand Piech abstained from a crucial boardroom vote, allowing VW employee representatives to continue blocking important management decisions that don't meet worker approval.
The Stuttgart wing of the Porsche family feel double- crossed by their cousin, but they may need to watch their own backs in the coming months after some extraordinary financial sleight-of-hand in October.
The company announced in a nonchalant press release that it had raised its stake in VW from 35 per cent to nearly 43 per cent, with further options that would increase its holding to 74 per cent, just short of a controlling stake.
Mayhem broke out in financial markets, where hedge fund managers had taken huge short positions on borrowed VW shares in the hope of profiting from a slide in value with the looming economic downturn.
Porsche knew that 12 per cent of VW shares had been lent out for short-selling and that its buy- up left just 6 per cent of shares in free trading. That forced hedge fund managers to buy back their borrowed VW shares at eye- watering prices of up to €1,005 which, for a few hours at least, made Volkswagen the most valuable company in the world.
"I had hedge fund managers on the phone, crying like little girls," recalled one Frankfurt analyst.
The little jaunt cost hedge funds an estimated €30 billion and earned Porsche a cool €6 billion, meaning the Stuttgarters earned six times more money beating financial experts at their own game than they did from selling them their sports car of choice.
However, after the high drama of 2008, Germany's most entertaining business saga ended on a downbeat note, when Porsche executives announced that deteriorating economic conditions meant they would not complete their takeover of VW by the end of the year as planned.
Already speculation is growing that the slowdown could play havoc with Porsche's acquisition plans. Whether or not it has the money, Porsche has only until July 2009 to purchase the share options it has secured to give it a controlling stake in Volkswagen.
This deal isn't just business, it's personal: only when the Porsche family in Stuttgart secure full control over VW can they exact their final revenge on their cousin, Ferdinand Piech.
The final act in Germany's greatest corporate battle has yet to be written, but it's a fair bet that it's going to end with blood on the carpet.
