FRANKFURT/BERLIN - Qatar has made an offer to the controlling Porsche and Piech families that could help reduce the mountain of debt at their wholly owned automotive holding Porsche SE.

"We received an offer from the Qatar Investment Authority (QIA) concerning an investment in Porsche SE and the purchase of options in Volkswagen (AG) stock," a spokesman for the company said on Monday, declining to comment on the timeframe of the negotiations.

German daily Frankfurter Allgemeine Zeitung reported earlier that the company still had to agree on the issue of the price that QIA would pay for the options for more than 20 per cent of VW's ordinary shares, which the paper said could be scarcely more than half of the approximately 250 euros (S$511) per share at which they trade.

On Friday, the company had said that the Gulf state had reached a "positive conclusion" during its due diligence of Porsche SE and negotiations with Qatar were heading into "the final stretch."

Lower Saxony, Volkswagen's second-largest shareholder, pushed VW and Porsche on Monday to break a deadlock in their frozen merger talks, as the two German carmakers squabbled over a deal.

Disagreements among Porsche's owning families and questions about preconditions for an investment by Qatar have held up progress toward creating a combined company, people close to the negotiations said.

"We need to clarify now whether each will go his own way or whether there is a common solution," Christian Wulff, premier of the German state of Lower Saxony, said in Berlin, adding that the state and VW both see the advantages of a deal.

Wulff said he felt a "certain irritation" after Porsche accused Volkswagen and Lower Saxony, which owns a blocking minority stake in Europe's biggest carmaker, of holding a gun to its head to agree to a deal quickly.

"Apparently not all facts are known to everyone," he said. Volkswagen and Lower Saxony deny making any ultimatum, which Porsche chairman Wolfgang Porsche and his deputy Uwe Hueck said in a joint statement on Saturday was "detrimental to the entire cause."

Porsche said a document containing "deadlines" was sent to Wolfgang Porsche last week.

Porsche dismissed as unworkable any deal which involved a partial sale of its sports car business to VW, noting that it would let banks call immediately a 10.75 billion euro (US$21.96 billion) syndicated loan they awarded Porsche in March.

Porsche and Volkswagen have been in talks to create an "integrated" automotive group after Porsche's 9 billion euro debt burden forced it to drop plans for a full takeover of VW. Porsche owns a 51 per cent stake in VW voting shares.

But progress toward creating a combined company stalled after Porsche chief executive Wendelin Wiedeking sought investment from Qatar's sovereign wealth fund.

Porsche said last week talks with Qatar had "entered the final stretch," but it has so far failed to secure an agreement. QIA chief executive Hussein al Abdullah would not comment.

Qatar wants to learn more detail about combining VW and Porsche before committing to an investment in Porsche Automobil Holding SE, a person familiar with the talks said.

Key to any progress would be the resolution of a dispute between the Porsche and Piech clans who own Porsche. Wolfgang Porsche opposes a sale of the Porsche AG sports car business to VW.

His cousin Ferdinand Piech, the chairman of Volkswagen, has in contrast been pushing for months for a sale of Porsche AG that would give the VW group its 10th brand.

VW is reluctant to continue talks with Porsche until the question of Porsche's Qatar investment is resolved, a person close to VW said.

VW finance director Hans Dieter Poetsch said this month that creating a combined VW-Porsche would be "a demanding task. Important questions need to be resolved beforehand. We're seeking ways, if there are any, to build an integrated firm." -Reuters