A report out of Reuters will be the final nail in all those shareholders who got caught with their pants down when Porsche announced its intention to dominate Volkswagen, which caused a insane squeeze when it became obvious there were not enough shares in the float to cover all the shorts.

Well, turns out all that was for nothing, and due to the massive capital crunch at both companies, the likely outcome now is that it was all total posturing, as was widely expected by all hedge funds, and the likely outcome is either a merger of equals or the two companies soon going their jolly separate ways.

(LON) Porsche drops goal of dominating VW - sources

May 6, 2009 - Porsche Automobil Holding SE has abandoned its target of reaching a 75 percent majority holding in Volkswagen AG, sources familiar with the matter told Reuters on Wednesday.

Porsche said in early January it controls about 51 percent of Volkswagen's voting shares and has repeatedly said it wants to raise its stake to 75 percent this year should economic conditions allow.

Porsche needs a different solution, said one person familiar with the discussions.

Porsche had no comment. Its controlling shareholders were meeting on Wednesday to discuss how to handle the 9 billion euros ($11.98 billion) in net debt it built up for the takeover.