Volkswagen makes Scania swoop

Volkswagen makes Scania swoop
Europe's biggest auto firm Volkswagen said on Monday it has won control of Scania, a step that could dramatically reshape the heavy vehicle industry via an eventual merger of the Swedish truck maker with German rival MAN.

VW will hold 68.60 percent of the voting rights in Scania and increase its direct stake to 37.73 percent after buying shares from the Wallenberg family, the German company said in a statement.

VW agreed to pay 200 Swedish kronor (€21.4, $32.4) per Scania share to the Wallenberg Foundations and Investor AG, which is controlled by the family, bringing the cost of the deal to around €2.87 billion.

Investor chief executive Borje Ekholm said his company had held a stake in Scania since it was founded in 1916, adding that the deal with Volkswagen would aid Scania’s future development.

“VW has proven to be a very good owner of industrial companies … and this transaction is the best solution for Scania,” Ekholm said.

Prior to the deals, VW owned 20.89 percent of the shares in Scania and held 37.98 percent of the voting rights.

“Scania is a strong premium brand which has a prosperous future,” VW chairman Martin Winterkorn said in the statement.

Scania boss Leif Ostlin told a press conference in Stockholm: “I very much welcome VW as the majority shareholder. It’s good for Scania to have the stability” following months of speculation over the company’s future.

VW is also the leading shareholder in the German conglomerate MAN, another manufacturer of heavy trucks and buses that tried to take over Scania in late 2006.

A merger of Scania and MAN would create the biggest European manufacturer of heavy trucks and Volkswagen reportedly favours a three-way tie-up that would also include VW’s Brazilian truck activities.

VW has been increasing its voting rights in Scania for the past several months by exchanging shares with fewer rights for others that had more.

It has pursued the same strategy with MAN.

MAN welcomed the news of VW’s Swedish move, with a spokesman telling AFP: “We foresee better conditions for the cooperation we seek with Scania and the heavy vehicle activities of Volkswagen.”

But VW financial director Dieter Poetsch told the Stockholm news conference that a merger of Scania and MAN was not likely in the short term.

While there was potential for savings with other groups, it was not the order of the day, Poetsch said.

Volkswagen also said Monday that it did not plan to make changes at Scania “that would affect adversely the employees of the company” whilst its headquarters and research centres would remain in Södertälje, near Stockholm.

Shares in MAN showed strong gains in midday Frankfurt trading, advancing 4.31 percent to €90.98 in a market that was 1.69 percent lower overall.

VW shares were flat at €149.89.