Bloomberg News

VW’s Scania Bid Wins Backing of Critical Swedish Investor Group

February 26, 2014

Volkswagen AG (VOW)’s bid for full control of its Scania AB (SCVB) truckmaking affiliate won tentative backing from a Swedish investors’ lobby that’s been critical of the German automaker.

VW’s offer is the “least bad option” for the Soedertaelje-based company’s minority owners, Carl Rosen, chief executive officer of the Swedish Shareholders’ Association, said in an editorial today in Dagens Industri business newspaper. The group has sought a probe to examine the ownership of Scania by VW and its other truckmaking unit, MAN SE. (MAN)

“We welcome the offer,” Rosen told Bloomberg today by phone. “We have not yet considered the level of the offer. Our special committee will consider that, and they have not yet come to a conclusion.”

Volkswagen and MAN together control 62.6 percent of the equity and 89.2 percent of the voting rights in Scania, and the world’s second-largest automaker is bidding 6.7 billion euros ($9.2 billion) for the remaining stock. Wolfsburg-based VW has been pushing for the two heavy-vehicle producers to cooperate more closely to challenge truck-industry leaders Daimler AG and Volvo AB. (VOLVB)

“No one should reject it, because that would mean keeping the untenable ownership situation,” Rosen said in the editorial. “There are no good options.”

Dividend Demand

The shareholders’ association said on Feb. 4 that it would seek an outside inspector to look into whether VW’s and Munich-based MAN’s ownership of Scania poses a conflict of interest. The investors group said it objected to Scania’s plan to cut its dividend and abolish a board-nominating committee, as well as to a reported intervention by Volkswagen in a Scandinavian military-vehicle order.

“We have called, and still call, for a special examiner to ensure that undue value transfer does not occur from Scania,” Rosen said in today’s editorial. “Regardless of our recommendation to accept the bid, we intend to propose maintaining the dividend, a special examiner and reinstatement of the committee” at the next annual shareholders meeting.

Failure of the 200 krona-a-share ($30.70) bid, which was 36 percent above the pre-bid closing price, could cause the stock to drop, he said. The German automaker will only carry through with the offer if it secures 90 percent of the shares. The tender period runs from mid-March to late April.

The Swedish company’s stock rose as much as 0.2 percent to 194.90 kronor and was at 194.80 kronor at 9:46 a.m. in Stockholm.

Scania’s board recommended yesterday that shareholders withhold from deciding on Volkswagen’s bid until a committee reviews the terms.

VW bought its first stake in Scania in 2000 from Investor AB, the holding company of Sweden’s billionaire Wallenberg family. Volkswagen began accumulating holdings in MAN in 2006 as part of moves to thwart the German truckmaker’s hostile takeover of Scania. It now owns a 75 percent stake.

To contact the reporters on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net; Veronica Ek in Stockholm at vek@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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