Volkswagen and Porsche have broadly agreed on details of a deal to unite.
Two VW board members have said VW will buy as much as 49 percent of Porsche as the first step in creating what VW calls "an integrated" automotive group" by the end of 2011.
One said: "Questions about valuation have been resolved"
The partial sale of Porsche's sports car business, which analysts have valued at as much as €11-billion (about R125-billion) will be decided at a VW board meeting on Thursday.
Porsche needs to repair its stretched balance sheet after a debt-financed buyout of VW backfired.
It owns a little more than 50 percent of VW's voting shares and controls about 20 percent of Europe's biggest automaker but was forced to abandon its stakebuilding early in 2009 and instead negotiate a merger.
Porsche ousted its chief executive, Wendelin Wiedeking, in July and is trying to reduce debt of more than €10-billion (R115-billion).
The combined entity could eventually be called "Auto Union" and be led by VW chief executive Martin Winterkorn, who has promised that Porsche would remain an independent brand - the tenth - in the VW stable.
At the same time, the Gulf state of Qatar wants to buy Porsche's package of options, worth about €5-billion (R57-billion), to reduce Porsche's debt.
Porsche's controlling families have already approved plans to raise at least €5-billion in capital by issuing ordinary and preferred shares.
Porsche could also sell some voting shares to Qatar as part of the deal but it remains unclear whether Qatar would take voting shares in Porsche, VW or both.
Porsche expects a pre-tax loss of about €5-billion due to losses in the value of VW stock options for the fiscal year that ended on July 31, 2009.
VW's home state of Lower Saxony is expected to retain its blocking minority stake. - Reuters