Der Spiegel magazine reported in its online edition on Saturday, that Porsche Chief Executive Wendelin Wiedeking and Chairman Wolfgang Porsche had been pressed to agree by the end of June that VW take a 49 percent stake in Porsche's sports car business for 3-4 billion euros ($4.2-$5.6 billion).
VW had threatened it could insist on Porsche paying back in September a 700 million euro loan VW had provided, if Porsche rejected the offer, Spiegel online said, without citing sources.
Porsche Chairman Wolfgang Porsche and his deputy Uwe Hueck, an employee representative, said in a statement on Saturday they had been given an ultimatum by VW and Lower Saxony.
We will not accept extortion. ... Ultimatums do not belong in the 21st century, they said.
We hope very much in the interest of the common goals that the authors of the ultimatum regain their calm and will pursue their proposals in internal talks and not via headlines..
Spiegel reported that as part of VW's proposal the Emirate of Qatar would buy Porsche's stock options in VW, which would subsequently integrate the Porsche sports car business into its operations.
VW would not comment on the report or on Porsche's response. The Emirate of Qatar was not immediately available for comment.
Porsche, which owns 51 percent of Volkswagen, racked up 9 billion euros ($12.7 billion) debt trying to swallow Volkswagen before the financial crisis threw it off course.
Spiegel reported that under the proposal the merged carmaker would eventually be 40 percent owned by the Porsche and Piech families, 20 percent by Lower Saxony, 15 percent by Qatar, and another sovereign wealth fund would hold 5 percent.
On Friday, Porsche SE said it was close to reaching a deal with Qatar that could help solve its financial problems.
The negotiations have entered the final stretch, a spokesman for Porsche said on Friday, adding Qatar had finished examining its books. The due diligence has reached a positive conclusion.
(Reporting by Ludwig Burger, Hendrik Sackmann and Arno Schuetze; editing by Sue Thomas)