VW Prolongs Scania Offer After Failing to Win 90% ControlChristoph Rauwald and Veronica Ek
Volkswagen AG, Europe’s largest automaker, extended the offer period for its 6.7 billion-euro ($9.3 billion) bid for the rest of truckmaker Scania AB after failing to reach the necessary 90 percent threshold.
VW, which already controls almost two-thirds of Scania’s equity, received acceptances giving it 88.25 percent of the company, the Wolfsburg, Germany-based manufacturer said in a statement. That’s short of the 90 percent needed under Swedish law to force out remaining investors and delist the company.
VW is pushing to fully buy the Soedertaelje-based truckmaker to advance cooperation between the Swedish company and Munich-based MAN SE, which VW also controls. Scania’s integration is vital to the German carmaker’s effort to forge a global heavy-vehicle business that can compete with leaders Daimler AG and Volvo AB. Volkswagen reiterated today that it won’t raise the offer price of 200 kronor ($30.44) a share.
“I think VW will manage to get above the 90 percent threshold eventually,” said Juergen Pieper, a Frankfurt-based analyst at Metzler Bank. “The shareholders who waited until the last minute for a better price got a clear signal now that this won’t happen.”
Scania gained as much as 6.30 kronor, or 3.3 percent, to 198 kronor and was trading up 2.8 percent as of 12:11 p.m. in Stockholm. VW rose 1 percent in Frankfurt.
Shareholders who have come out against the offer argue that the bid is too low and that the Swedish truckmaker would fare better remaining a separate listed company, echoing comments from an independent Scania board committee that also rejected the deal. The panel stuck to that opinion today.
“The committee made its recommendation on March 18” and “has nothing new to add,” Aasa Thunman, the panel’s chairman, said in an e-mailed response to questions. “Whether to tender their shares or not is a decision for the shareholders.”
Volkswagen currently controls 62.64 percent of Scania’s stock. The carmaker is offering 36 percent more than Scania’s closing price on Feb. 21, when VW announced the bid. The carmaker said it didn’t buy stock or other financial instruments in the truckmaker during the offer term, which expired April 25. Investors now have until May 16 to tender their stock.
“We are confident” the new deadline will result in “the necessary acceptance level for this transaction,” VW Chief Financial Officer Hans Dieter Poetsch said in the statement.
The German manufacturer has thus far reaped limited financial rewards for the billions of euros invested in buying control of Scania and MAN in the last decade as minority investors resisted efforts to share technology that would boost profit. The combined businesses would overtake Stuttgart, Germany-based Daimler and Gothenburg, Sweden-based Volvo as the biggest truck producer in Europe.
VW has achieved only 200 million euros in savings from joint work among its light commercial-van unit, Scania and MAN. VW’s goal is to deepen cooperation among the three businesses in areas such as drivetrains, chassis, cabins and electronics to reach annual operating profit synergies of 650 million euros.
The automaker already has a domination agreement with MAN, which means the two can legally work more closely. That leaves Scania as the last unit preventing VW from creating an integrated heavy-truck division.
“Increasing the synergies substantially from the currently low levels is the only way to earn a return on the high acquisition costs of the truck brands,” said Roman Mathyssek, a Munich-based analyst at consultancy Strategy Engineers GmbH.
AMF, a Swedish pension-fund group that owned 0.87 percent of Scania stock as of March 31, is sticking by a decision against selling its shares to Volkswagen.
“Today’s news doesn’t change our view on the offer,” Mikael Lindh-Hoek, an AMF spokesman, said in an e-mailed response to questions. “Our decision was based on the long-term valuation of Scania.”
Investor AB, the holding company of Sweden’s Wallenberg family and the owner of 3.1 million Scania shares, declined to comment on its intentions after keeping its stake during the initial tender.
“We now have the acceptance count and will, like everyone else, have to evaluate that,” said Stefan Stern, head of corporate relations at Stockholm-based Investor.