Volkswagen plans to boost its holding in German truckmaker MAN to as much as 40 per cent to forge a truck alliance with Scania in Sweden that could save upwards of euro 1 billion ($1.43 billion) in annual costs.
Wolfsburg, Germany-based Volkswagen (VW) today increased its stake in the commercial-vehicles maker to 30.47 per cent, requiring Volkswagen to make a mandatory bid for the entire company. Europe’s largest carmaker offered euro 95 per common share, less than the May 6 closing price of euro 96.52.
Volkswagen Chairman Ferdinand Piech is pushing MAN and Scania to reduce spending as he also pursues a merger with Porsche and seeks to surpass Toyota Motor Corp as the world’s biggest automaker by 2018. Volkswagen’s increased stake may allow the companies to get regulatory approval to share business information with one another and work more closely together.
“VW has long been keen to merge MAN and Scania to reap the benefits on purchasing, development and production,” said Frank Schwope, a NordLB analyst in Hanover, Germany, who recommends buying VW and MAN stock. “They’ve been frustrated by legal impediments and are taking the lead to see this project through.”
VW, which before today held 29.9 per cent of MAN’s voting rights, sees cost reductions of about euro 1 billion for an integrated company fully sharing research and development activities, CFO Hans Dieter Poetsch said.
VW aims for an MAN holding of 35 per cent to 40 per cent to give it a stable majority at annual meetings and estimates reaching that level may cost as much as euro 1.5 billion, he said. The carmaker will be able to buy the shares it needs on the open market after making the mandatory bid if enough investors don’t tender their shares at the offer price.