Scania accepts VW bid

After several months of protracted negotiations, Volkswagen AG's Euro 6.7 billion bid for Scania has been accepted by the latter's minority shareholders

Volkswagen AG has pushed home its bid for total control of Scania, paving the way for the formation of a third major European truck alliance to challenge Daimler and Volvo.

Volkswagen AG made its initial offer of SEK 200 (approximately Euro 22.26, or $A32.53) per share for the nearly 300 million shares in Scania it didn’t yet hold in late February, 2014, but the offer – worth a total of Euro 6.7 billion ($A9.8 billion) – was rejected.

At that stage VW held 89.2 per cent of the voting rights in Scania and 62.6 per cent of its capital, but the German giant need to secure a stake of at least 90 per cent to assume full control, allowing it to circumvent legislation that protects minority shareholders.

After the initial bid was rejected a fresh deadline of April 25 was set. That too passed without VW crossing the 90 per cent threshold but on Tuesday, May 13, VW announced it had assumed control of 90.5 per cent of the Swedish truck manufacturer’s capital, after convincing 27.5 per cent of Scania’s shareholders to accept its initial offer.

The final barrier to crossing that 90 per cent threshold fell when Alecta, a Swedish pensions manager with a 2.04 per cent stake, said it would accept the offer which, when initially made, represented a premium of 57 per cent per Scania A share and 53.3 per cent per Scania B share.

Alecta was one of several shareholders who at first claimed the offer didn’t adequately reflect Scania’s true long-term potential value, but evidently VW’s persuasion and persistence eventually paid off.

Other minority shareholders AP4 and Skandia Liv – also Swedish pensions funds – followed suit. They held 0.6 per cent and 0.9 per cent stakes respectively.

Settlement of the shares tendered before May 12 will not take place until around May 19, but experts say it’s highly unlikely that any parties who have accepted the offer will backtrack on their decision. Settlement of the shares tendered after May 12 will occur around May 27.

Speaking at VW’s annual shareholder meeting in Hanover, Germany, chief executive Martin Winterkorn said the acceptance of the offer represented an important step in the group’s trucking ambitions.

“We can now take the next logical and consistent step in our strategy to strengthen the operating integration of Scania, MAN and VW commercial vehicles,” he said.

The move allows Volkswagen to realise synergies between those three truck operations, forming a partnership to take on the might of the other two European trucking heavyweights, Daimler and Volvo.

While maintaining each company’s separate brand identity in the marketplace, Volkswagen has said it hopes to unlock profit synergies of Euro 650 million ($A950 million) a year through streamlining its activities in the trucking sphere, although it admits it may take up to a decade to achieve those figures.

The union will see VW attempt to replicate its multi-brand momentum in passenger cars in the truck world, as it continues in its quest for global automotive domination.

Scania accepts VW bid

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