Insert 'just a VW Beetle' joke here...
It will give the prestigious car maker access to diesel engines and more sourced components - VW currently supplies around a third of Porsche parts.
The move coincides with VW buying a controlling stake in Swedish truck maker Scania which in turn now gives Porsche huge control over the European car industry.
But Porsche says it is not planning to merge with Volkswagen.
The firm's chief executive Wendelin Wiedeking said: "Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition."
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