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MAN drops Scania bid

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16:31 CET+01:00
German engineering conglomerate MAN said on Tuesday it had decided to drop its hostile €10.2-billion-euro takeover bid for Swedish truckmaker Scania with a view to securing a friendly tie-up instead.

Negotiations between MAN and Scania's main shareholders, German car giant Volkswagen and Swedish holding company Investor, "have shown that there is an industrial logic behind a combination of MAN, Scania and Volkswagen Heavy Trucks," MAN said in a statement.

"However, it is not possible to achieve such a combination by way of MAN's current offer for Scania, which is due to close on January 31 and which has been rejected by both VW and Investor," the statement said.

"In light of this, MAN has decided not to amend the terms, conditions or timing of its offer. As a consequence, MAN will seek the approval of the Swedish Securities Council to withdraw the offer as it is clear that the conditions of the offer will not be met by January 31."

Instead, MAN, as a shareholder of Scania, "is looking forward to entering into further discussions during 2007 to seek a friendly combination of MAN, Scania and Volkswagen Heavy Trucks."

At the same time, MAN would "continue to focus on developing its present businesses and to explore other opportunities to achieve greater efficiency through scale thereby increasing value to our shareholders," it added.

MAN officially launched a 10.2-billion-euro bid for Scania on November with the aim of creating Europe's biggest truckmaker.

But the Swedish group and its shareholder Investor have so far rejected the German company's advances.

And VW, which holds major stakes in both MAN and Scania, has said it opposed a hostile takeover and urged the two sides to reach an amicable deal instead.

VW wants an amicable deal so that it can then bring its own Brazilian truck-making activities into the tie-up.

In a statement released in Stockholm, Investor said it welcomed MAN's decision to withdraw its bid.

As it stood, the MAN offer "neither provided the foundation for identifying the right structure of a combination nor reflected the value or potential of Scania," Investor argued.

Investor would continue to "support Scania's successful development as a stand-alone company, but we will naturally evaluate possible industrial partnerships and combinations in order to develop Scania further," it said.

Amicable talks with MAN and VW were "a priority," it insisted. "The lapse of the bid provides an opportunity to do so without time pressure," it added.

VW, the biggest shareholder in both Scania and MAN, also welcomed the latest development, saying that it had always pushed for an amicable solution.

"An amicable solution is the best way to harness the high synergy potential of a merger," it said in a statement.

Investors welcomed the cessation of hostilities.

MAN shares ended the day 1.66 euros or 2.24 percent higher at 75.76 euros, amid relief the company would not have to fork out 10.2 billion euros for Scania.

VW shares closed 0.30 euros or 0.36 percent higher at 84.67 euros.

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