VW raises stakes in Scania merger drive

Volkswagen, Europe's leading auto maker, shifted up a gear Wednesday in its drive to engineer a three-way trucks merger between itself, MAN and Scania, by raising its stakes in both the German and Swedish truck makers.

In the past few days, VW has sought to increase its influence in both companies, in an attempt to break a deadlock over MAN’s long-running, hostile €10-billion-euro bid to buy Scania.

Scania has so far rejected all of MAN’s approaches. But VW, which owns sizeable stakes in both companies, has been keen for the two sides to reach an amicable deal so that it can bring its own Brazilian truck activities into the venture.

With little sign of either MAN or Scania willing to back down, VW has taken matters into its own hands by raising its stake in both companies and seeking seats on their supervisory boards.

A few days ago, VW announced that it had raised its stake in MAN to 29.9 percent.

Then on Tuesday, VW’s chief executive Martin Winterkorn was appointed head of Scania’s supervisory board and it also emerged that the German auto giant was seeking three seats on MAN’s 10-strong supervisory board as well.

In a statement released on Wednesday, VW announced that it had increased its voting stake in Scania to 35.31 percent from 34 percent previously, which meant the German car maker’s overall shareholding in Scania rose to 20.03 percent from 18.7 percent.

“The step underlines the importance Volkswagen attaches to its participation in Scania,” VW explained.

“The shareholdings in MAN and Scania aim to safeguard our strategic interest in the commercial vehicles business and are adequate for finding a friendly and mutually agreeable solution to realise the acknowledged high synergies.”

VW said that it had received special dispensation from the Swedish stock market authorities to raise its stake in Scania to 49.99 percent without being obliged to launch a mandatory bid for the remaining shares.

A company spokeswoman declined to say whether VW actually intended to increase its stake in Scania to that level.

MAN has long been battling to to take over Scania, after launching a €10.2-billion bid last November with the aim of creating Europe’s biggest truck maker.

Press reports suggested last week that VW sees MAN’s chief executive Håkan Samuelsson as the main hurdle to a friendly merger and was therefore seeking to oust him.

To this end, VW is seeking to boost the number of its seats on MAN’s supervisory board.

In a board reshuffle, the current VW representative, Audi chief executive Rupert Stadler, is standing for re-election.

But in addition, VW supervisory board chief Ferdinand Piech is to be nominated for election, as is the head of VW’s heavy trucks division, Stephan Schaller.

Given the complexity of the matter, analysts do not expect a solution to be reached in the near term.

But the latest developments would put VW in a better position to achieve its goals, they said.

“We believe that the latest developments increase the probability that an amicable solution can be reached, and barring that, an unfriendly solution,” said Merck Finck analyst, Robert Heberger.

“Volkswagen is moving its pawns in the current chess-game ahead of the resumption of talks.

“Tactically, it’s a good move. It shows its determination to accelerate the process. And by raising its stakes in both MAN and Scania, it will also gain a bigger stake in the merged entity,” said HVB analyst Nathan Kohlhoff.

In midday trading on the Frankfurt stock exchange, MAN shares were showing a gain of €2.98 or 3.76 percent at €82.25. VW shares were up €2.26 or 2.4 percent at €96.31.