Volkswagen, Europe's biggest carmaker, and luxury auto manufacturer Porsche have finally approved a plan to merge by 2011.

The move will create an automotive giant, which includes ten major brands - including Volkswagen, Porsche, Audi and Skoda.

Under the terms of the agreement, Volkswagen will pay up to 3.3 billion euros for the stake by the end of 2009 and issue new preferred shares sometime in the first half of
2010 to finance the deal.

Post merger, Martin Winterkorn, chief executive of Volkswagen will become head of both Porsche and VW.

The deal comes after months of complex multiple twists and turns, family feuds, boardroom battles and acrimonious negotiations.