Swedish truck maker Scania rejects Volkswagen's bid
19 March 2014
The independent committee of Swedish truck maker Scania yesterday rejected a complete takeover bid from Volkswagen AG, saying that the offer under-valued the company.
"Based on the long-term prospects of Scania, its growth outlook, technological excellence and the synergy potential, the committee believes the offer from Volkswagen does not reflect the long-term fundamental value of Scania and a fair share of the expected synergy potential," Scania said in a statement.
Volkswagen, which holds a 62.6 per cent stake in Scania, had last month offered to buy the remaining Scania A and B shares for SEK 200 ($22) per share, for a total of approximately €6.7 billion ($9.21 billion). (See: VW to buy out minority shareholders of Swedish truck maker Scania for $9.21 bn)
Volkswagen has stuck to its offer, which is a premium of about 50 per cent to Scania's undisturbed share price, and said that its offer is a ''highly attractive and balanced deal'' that would allow Scania shareholders ''to realise the maximum value they can realistically expect from their investment.''
But Åsa Thunman, chairman of the Independent Committee at Scania said, ''Scania is a world-leader in its industry and the committee has strong faith in the business plan set out by the company. Our assessment is that the current offer does not reflect the long-term value of the company and a fair share of the synergies.''
Two of Scania's minority shareholders, pension fund AP4 has rejected the offer as too low, while insurance company Skandia wants the company to remain independent.
Although the offer has received a positive response from the Swedish Shareholders' Association, the IF Metall trade union at Scania in Stockholm have expressed apprehension as they feel that they would lose their influence if Volkswagen takes full control of Scania.
Volkswagen, which also hold controlling stake in another truck maker MAN SE, had said that it will go ahead with its buyout offer only if it is able secure 90 per cent of Scania, a threshold required under Swedish law.
Volkswagen, which had started investing in Scania in 2000, said that until it takes full control of the Swedish commercial vehicles maker, ''it is not possible to leverage the full potential of closer cooperation at an operational level between Volkswagen and Scania, as well as between MAN and Scania, due to the legal restrictions in place to protect the minority shareholders in Scania.
Volkswagen said that a complete merger will generate additional synergies of at least €650 million per year from joint development and other steps, but added that in light of the long product lifecycles in the commercial vehicles industry, it will be 10 to 15 years before this potential synergy can be fully achieved.
Stockholm-based Scania is one of the world's leading manufacturers of trucks and buses for the heavy transport industry, and of industrial and marine engines.
Employing around 41,000 people in around 100 countries, Scania generated net income of SEK 6.2 billion in 2013 on revenues of SEK 86.8 billion.