German giant Volkswagen ‘s recent increase of its shareholding of MAN trucks means that it has now passed the threshold it requires to bid for any outstanding shares it does not own in the company.
VW took its shareholding to 30.47% last week, prompting speculation that it could be on the brink of buying MAN outright. Doing that would cost $20b and enable its long-planned for merger between its two truck properties Scania and MAN.
However there are suggestions that investors and shareholders would not be forced to accept the 95 euros per common share, less than the May 6 closing price of 96.52 euros, VW would offer as part of the mandatory bid.
“Volkswagen goes one step further towards an integrated commercial vehicle group consisting of MAN, Scania and Volkswagen,” the company said in a statement.
VW also owns 45.66% of the shares in Scania, along with 70.94% of the voting rights, while MAN owns another 13.35% of Scania’s stock.
VW CEO Martin Winterkorn made a clear statement of intent and said: “We want to pave the way for a closer cooperation between MAN, Scania and Volkswagen. The commercial vehicle business is a very attractive strategic business field for us.”
Only closer inspection reveals just how strategic VW is approaching the merger. Even if its offer is not accepted it could bid for shares on the open market, thought to be worth $1.5b, which would take its ownership to 40%. Although this would not give it an outright majority, it could potentially hold an uncontested majority on the board.
Considering that it estimates that greater co-operation and/or a merger between the two could save $1.43b annually for VW then it is a question not if it is going to drop into the market for the shares but when.
The extra share purchase suggests that VW is ready to reverse its earlier policy of waiting for MAN to settle its dispute with Abu Dhabi’s IPIC over the ownership of plant provider Ferrostaal. It also sidesteps German restrictions regarding the sharing of information between companies.
VW wants to overtake Toyota as the world’s largest auto-maker in two years and Frank Schwope, a NordLB analyst in Hanover, Germany told Bloomberg that the company had grown tired of waiting for the law to catch up with its ambitions.
“VW has long been keen to merge MAN and Scania to reap the benefits on purchasing, development and production,” Schwope told Bloomberg. “They’ve been frustrated by legal impediments and are taking the lead to see this project through.”
