VW Obtains Majority Stake In Swedish Truck Maker

Volkswagen will pay $2.85 billion to become the biggest shareholder of Scania in a deal that could clear the road for new talks about combining it with German truck builder MAN AG.

BERLIN (AP) â€” Volkswagen AG said Monday it will become the biggest shareholder of Swedish truck maker Scania, paying at least $2.85 billion in a deal that could clear the road for new talks about combining it with German truck builder MAN AG.
 
Wolfsburg-based Volkswagen, Europe's biggest automaker in terms of sales, said it had agreed with Scania shareholders Investor AB and the Wallenberg Foundations to buy their combined 134.7 million A-shares of Scania.
 
Volkswagen did not give a value on the deal, which is still subject to regulatory approval.
 
Investor, however, said Volkswagen agreed to pay 200 kronor ($32.44) per share for a total of 17.6 billion kronor ($2.85 billion) in cash for Investor's stake in Scania, which is based in Soedertaelje, Sweden.
 
The Wallenberg Foundations, which owned 5.8 percent of the shares and 10.6 percent of the voting rights in Scania, also sold its stake for 200 kronor per share.
 
The purchases lift Volkswagen's voting rights in Scania to 68.6 percent from 38 percent and give it 37.7 percent of Scania's capital.
 
The deal is also expected to put an end to the three-way struggle among Volkswagen, MAN and Scania in the aftermath of the Munich-based truck maker's failed 10.3 billion euro hostile bid for Scania. MAN abandoned its bid in early 2007 amid fierce resistance from Scania and its key shareholders.
 
Volkswagen owns 29.9 percent of MAN, and Monday's announcement means it is the biggest single stakeholder in both MAN and Scania.
 
Evli Bank analyst Magnus Axen said it remained unclear if Volkswagen would launch an offer for all Scania's shares, but added that he expected such a move would come sooner or later.
 
''It is very probable that they will want to proceed with this,'' he said, adding that some kind of collaboration between Scania and MAN can be expected.
 
Volkswagen does not need to put in a bid for all Scania shares, since it has been granted exemption from the provisions on mandatory bids, Rolf Skog, of the Swedish Securities Council, told Swedish news agency TT.
 
According to Swedish regulations, a company that owns more than 30 percent of the votes in another firm is normally required to make an offer for all shares.
 
In a statement, Investor said that it, the Wallenberg Foundations and Volkswagen had ''in-depth discussions regarding the alternatives to clarify the ownership structure in Scania. In these discussions, Volkswagen has stated a strong interest to become a majority shareholder in Scania.''
 
Investor said it was satisfied with the deal, which ''we believe is good for Scania.''
 
Investor also said it was ''inconsistent'' with its strategy ''to be an owner with limited influence in a company which has an industrial shareholder in a lead position.''
 
Investors sent shares of Scania up 12 percent to 168.50 kronor ($27.33) and Investor shares up 0.2 percent to 132 kronor ($21.42) in Stockholm trading. In Frankfurt, shares of MAN rose 3.7 percent to 90.47 euros ($137.22), while shares of Volkswagen slipped 0.3 percent to 149.53 euros ($226.79).
 
Though Volkswagen did not address what its purchase may mean for a possible deal with MAN, analysts contend that Volkswagen's prominent stake may smooth over any wrinkles and result in a combination.
 
In a statement, Volkswagen offered few hints, saying only that it did not ''foresee any further structural changes that would affect adversely the employees of (Scania).''
 
''Scania is a strong premium brand which has a prosperous future. We will support the management of Scania and its team in executing the strategy of profitable growth,'' Volkswagen chief executive Martin Winterkorn said.
 
''Investor and Volkswagen have worked successfully together for eight years and during this time Scania has achieved record sales and profit,'' he said. ''Both parties believe that this transaction is in the best interest of Scania and Sweden.''
 
And, in a nod to the sharp criticism leveled by Swedes when MAN first made its hostile offer in 2006, Winterkorn said Volkswagen would keep Scania's headquarters and its engineering centers in Soedertaelje.
 
''We will continue to act as a responsible shareholder in the company in line with Swedish corporate governance practice and ensure that Scania's Board of Directors is comprised of strong and well qualified members including strong independent representation,'' he said.
 
Associated Press writer Malin Rising reported from Stockholm, Sweden.
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