TURIN, Italy - Volkswagen AG's shopping spree moved to Italy last week, where VW's Audi AG signed a letter of intent to buy Automobili Lamborghini S.p.A.
Terms were not disclosed, but sources say Audi offered around $100 million for Lamborghini, which built 216 Diablos last year.
The companies said they expect to close the sale in the next few weeks.
Lamborghini employs 310 people at its plant in Sant'Agata Bolognese, 12 miles south of Modena.
Indonesian businessman Hutomo 'Tommy' Suharto, the son of former Indonesian President Suharto, controls 60 percent of the company.
The remaining 40 percent is held by the Malaysian firm Micom Setdco.
After years of losses, Lam-borghini reported a $4.2 million operating profit in 1997 on sales of about $48 million. But the owners have been seeking new investors to fund an expansion of the product lineup.
An Audi spokesman described the purchase as a 'long-term investment.' He said Audi would operate Lamborghini as a wholly owned foreign subsidiary.
The talks began when Lamborghini approached Audi last year in search of V-8 engines and other parts for its planned 'Baby Diablo.'
The new model, code-named L140, is expected to be priced at around $100,000 when it goes on sale in 2000. Lamborghini hopes for sales of around 2,500 annually.
Volkswagen will be the seventh owner in Lamborghini's 35-year history. Chrysler Corp. owned Lamborghini from 1988-93.