A BBC News article reports that Volkswagon (ETR:VOW) is backing away from merger talks with Porsche (ETR:PAH3).

I first told you about this merger, which would consolidate company operations, back on May 8, here on the Emerging Markets Blog. The BBC reports that VW is suspending talks with Porsche saying that, “constructive negotiations were not possible at the moment.” Porsche has a significant amount of debt, and VW wants the luxury car company to reduce that debt. Ironically, Porsche took on about $12.2 billion in debt so that it could increase its stake in VW… The history between these two companies is long and complicated, and while VW says its backing away from the table, the two own stakes in each other and were founded by the same family. Porsche says the talks are still ongoing.

Source: VW/Porsche Merger Stalled?