Mumbai: Auto giants Volkswagen and Porsche have signalled a massive alliance in the car- and truck-making industries Europe wide, with Volkswagen taking a controlling stake in Swedish rival Scania while luxury carmaker Porsche proposed to take a majority stake in Volkswagen.

German sports car maker Porsche said it would increase its 31 per cent voting stake in Volkswagen to a majority without merging the two carmakers.

Porsche's supervisory body also authorised the move, which the company said would represent an investment of almost 10 billion euros ($15.17 billion).

Lifting its stake above 50 per cent would not require Porsche to make a full bid for VW, because it made an offer at the legal minimum price last year that few investors took up.

Meanwhile Volkswagen, Europe's biggest automobile manufacturer, has already acquired controlling stake in Swedish rival Scania, paving way for its merger with MAN that would create the biggest European manufacturer of heavy trucks

Volkswagen, has acquired a 37.73 per cent direct stake and a 60.8 per cent voting right in Swedish rival Scania.

Volkswagen acquired the controlling stake in Scania after buying shares from the Wallenberg family for 2.87 billion euros, the German company said in a statement.

Volkswagen, the leading shareholder in German heavy vehicle maker MAN, owned 20.89 per cent of Scania shares and 37.98 per cent of the voting rights prior to the deal.

The move could lead to an eventual merger of Scania and MAN, thereby reshaping the heavy vehicle scenario.

A merger of Scania and MAN would create the biggest European manufacturer of heavy trucks. Volkswagen may also opt for a three-way tie-up that would also include Volkswagen's Brazilian lorry activities.

"Scania is a strong premium brand which has a prosperous future," Volkswagen chairman Martin Winterkorn said in a statement.

Volkswagen agreed to pay 200 Swedish kronor (21.4 euros, 32.4 dollars) per Scania share to the Wallenberg Foundations and Investor AG that are controlled by the family bringing the cost of the deal to around 2.87 billion euros.

Winterkorn, however, said Scania would remain a premium brand and Volkswagen would not make any structural changes, including job cuts.

MAN has failed to get a single seat on the Swedish company's board, despite having 17 per cent of Scania's voting rights.

Volkswagen, which bought 30 per cent of MAN in October 2006, has a three-way tie up that would combine its own heavy truck business with Scania and MAN, to create a market leader and allow it to take on Daimler's truck division and Volvo.

Porsche has long been expected to gain majority control of VW after Europe's highest court last year struck down a German law that capped individual shareholders' voting rights in VW.

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