Porsche/VW showdown looms by July 16-sources

By Edward Taylor and Alexander Huebner

FRANKFURT, July 3 (Reuters) - Porsche's (PSHG_p.DE: Quote, Profile, Research) squabbling owners are set to discuss an investment by Qatar in the next two weeks, a milestone which could change the dynamics of a Porsche/Volkswagen merger, people close to the talks said.

A decision on Qatar's entry may come even before key family members are set to gather at a Volkswagen (VOWG.DE: Quote, Profile, Research) supervisory board meeting on July 15, and a day later for the centenary celebrations at VW unit Audi (NSUG.DE: Quote, Profile, Research), the people said.

Spokesmen for Porsche and VW declined to comment.

A successful investment from Qatar could strengthen Porsche Chief Executive Wendelin Wiedeking's negotiating hand as he tries to strike a deal with VW.

Without it Porsche will struggle to prop up its finances and may have little choice but to succumb to a reverse takeover from VW, Europe's biggest carmaker.

Porsche, which owns 51 percent in VW, is seeking an outside investor after amassing 9 billion euros ($12.62 billion) in debt during a bungled attempt to dominate Volkswagen.

Struggling under the debt, Porsche was forced to abandon efforts to raise its VW stake to 75 percent and is now seeking to bolster its finances before negotiating a deal to form an "integrated" company with VW.

Porsche's chances of setting the terms of any deal are looking slim. Wiedeking has so far failed to secure 1.75 billion euros in loans it wants from commercial banks or from KFW, a state-controlled bank in Germany.