MAN makes hostile bid for Scania

24 April 2008

German Truck Manufacturer Man Group Has Made a € 9,6 billion offer to acquire Swedish rival Scania. Scania’s Board is not recommending the offer to its shareholders.

MAN’s offer comprises a mixture of cash and shares. The company says it represents a premium of +39% on Scania’s A-series shares and +36% on its B-series shares, based on a three month weighted average to 11 September. The offer is conditional on MAN acquiring 90% of Scania’s shares and voting rights, and on approval from various competition authorities.

According to MAN, the merger would create a new market leader in the European truck sector, and worldwide number three. The company also says it could achieve annual savings of € 500 million per year within three years.

Scania’s Board made little comment in rejecting the offer, other than to say it sought external advisors to assess it, and following this the nine-member group voted unanimously not to recommend it to shareholders.

Scania’s largest shareholder, with 18,7% of its equity and 34% of its voting rights, is Germany’s VW Group. VW describes its holding in Scania as “strategic”, and its CEO, Bernd Pischetsrieder is chairman of the Swedish company’s Board. Commenting on MAN’s offer, VW said it “... would not be in line with these industrial interests.”

Investor AB, Scania’s second largest shareholder said MAN’s offer, “did not reflect the fair value and potential of Scania.” The company owns 10,8% of Scania’s equity and 19,3% of its votes. Investor AB is controlled by the Wallenberg family, one of Sweden’s richest industrial dynasties. The family has held a stake in Scania since the formation of Investor AB in 1916.

Last year Scania had sales of SEK 63,3 billion (€ 6,87 billion) and made a net profit of SEK 4,7 billion (€ 510 million). MAN had sales of € 14,7 billion and net profits of € 472 million.

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