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MAN SE Asks Bavarian Help to Avoid Factory Closures

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Scania, MAN SE Explore Combination to Take on Mercedes-Benz
Visitors pass a Scania AB truck prior to the opening of the IAA Commercial Vehicles Show in Hanover. Photographer: Jochen Eckel/Bloomberg

Feb. 18 (Bloomberg) -- MAN SE, the German truckmaker that may merge with Scania AB, has asked lawmakers to step in to help prevent job losses and factory closures in the event of a combination with the Swedish rival.

MAN is talking with the Christian Social Union, Bavaria’s ruling party, about the impact of a merger with Scania on local production, three lawmakers said. The CSU has proposed a motion in the regional parliament urging the state to help protect Munich-based MAN’s 17,000 Bavarian jobs.

“Our goal is to take up those concerns and ensure that no breakup of MAN will creep on the agenda,” said Markus Blume, a CSU lawmaker. The motion aims to ensure “that Munich will remain the place where future strategic decisions at MAN are taken.”

MAN and Scania have been exploring ways since last July to cooperate and possibly combine to cut development and purchasing costs. The merger talks take place amid bribery investigations at MAN’s Ferrostaal AG division and a European Union probe into price fixing that also involves Daimler AG and Volvo AB.

Volkswagen AG, Europe’s largest automaker, is MAN’s biggest investor with a 29.9 percent stake and controls 71 percent of Scania’s voting rights. A combination of the truckmakers, with annual revenue of $29 billion and a combined market value of $33 billion, would create the largest manufacturer of commercial vehicles in Europe.

‘Eye to Eye’

Dominique Nadelhofer, an MAN spokesman, declined to comment, as did Hans-Aake Danielsson, a spokesman at Soedertaelje, Sweden-based Scania.

The CSU, the Bavarian sister party of German Chancellor Angela Merkel’s Christian Democratic Union, will seek approval by lawmakers in the Bavarian parliament of the pro-MAN motion on Feb. 24, said CSU lawmaker Klaus Dieter Breitschwert.

MAN employs 48,000 workers, of which 27,000 are based in Germany. The company makes heavy trucks, gear boxes and axles at its Munich headquarters and engines in Nuremberg. Bavarian operations also include the RENK AG unit in Augsburg, a producer of gears for industry, power plants and marine propulsion.

“It’s crucial that the conditions of a merger, if it happens, are fair and that MAN and Scania are looking eye to eye,” said Juergen Wechsler, the Bavarian leader of IG Metall, Germany’s biggest union. “It’s legitimate to rope in the government. They may be able to influence the terms. Ultimately, it’s a give-and-take for all players involved.”

‘Bargaining Chip’

VW bought the MAN stake to help Scania fend off the German rival’s hostile bid four years ago and took its controlling stake in Scania in 2008. VW Chairman Ferdinand Piech has said he wanted to see the truckmakers’ cooperation to accelerate.

“He’s juggling with Bavarian interests and that’s not right,” said Erwin Huber, a CSU lawmaker and former state minister. “MAN is no bargaining chip.”

Before today, MAN had risen 2.7 percent since Scania said Nov. 15 that it’s considering a merger with the German company. Scania had lost 9.2 percent in the same period.

MAN slid 2 cents to 84.68 euros at 9:38 a.m. on the Frankfurt exchange. Scania lost 1 percent to 131.20 kronor on the Stockholm exchange.

Hakan Thurfjell, a member of Scania’s supervisory board who represents employees, said he’d also expect the Swedish company to approach local lawmakers to help secure jobs if the merger happens. Scania has about 35,500 workers.

“We’re equally eager to keep workers employed here in Sweden,” he said by phone, adding that Scania hasn’t reached out to politicians. Whether MAN and Scania will end up merging “is difficult to say.”

“You don’t want to be dragging the bride to the wedding,” Thurfjell said.

To contact the reporters on this story: Andreas Cremer in Berlin at acremer@bloomberg.net; Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net.

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