MAN presents takeover bid for Scania

A German transportation company, MAN AG said Monday, that it made a combined cash (worth 9.6 billion euros ($12.2 billion) and share takeover bid for the Swedish company Scania AB to form Europe's largest maker of commercial vehicles.

Munich, Germany based Europe's third-largest truckmaker MAN said it would pay 38.35 euros ($48.51) in cash and issue 0.151 new shares for each Scania share, valuing shares in Scania AB at 48 euros a share, or a little over 440 Swedish crowns, based on MAN's closing price on Friday of 64 euros a share.

Man said the bid price represents a premium of 39% for A shares of Scania and 36% for B shares based on the three- month average price until Sept. 11. The bid will be subject to customary terms and conditions. The takeover bid is conditional upon a 90% acceptance level as well as approval by the relevant antitrust authorities. The completion of the offer is expected to take place prior to 31 December 2006. MAN may waive, in whole or in part, the offer conditions.

The cash segment of the offer will be funded through MAN's cash reserves in hand and a credit facility, the company said.

The supervisory board of MAN met yesterday to approve the move. On the other hand, Södertälje, Sweden based Scania has not yet approved the bid, but the German automaker is hopeful of the deal ultimately being friendly, the sources familiar with the matter confirmed.

Together MAN and Scania would become Europe’s leading truck business creating a platform for profitable growth, the company unleashed statement on their website. Nonetheless, if MAN's takeover bid, which is likely to create a company with commercial-vehicle sales of more than 12 billion euros annually, happens, then it would mark the first trucking industry merger in Europe in five years, since Volvo acquired Renault Trucks and its U.S. subsidiary Mack Trucks in January 2001.

MAN has entered into an agreement with Renault SA to acquire 5,697,042 A Scania shares, representing 2.85% of the shares and 5.18% of votes in Scania, the company said today. The statement did not mention the stakes held by Volkswagen AG and Investor AB, Scania's two largest shareholders.

Volkswagen and Investor, both are crucial to the deal because together they control 53.3% of the truckmaker's voting rights. Volkswagen, Europe's largest carmaker, holds 34% of Scania's voting rights and 18.7% of equity. At the same time, Stockholm-based Investor has 19.3% of the voting rights and 10.8% of Scania's capital.

Meanwhile, MAN intends to sell 47% more trucks worldwide by 2010, boosting sales to at least 100,000 trucks compared with 68,209 vehicles last year, the company said in March. A manufacturing facility near Krakow, Poland, is due to open in 2007 with the capacity to create 15,000 vehicles annually.

The German truckmaker has said its one-third stake in a 150 million-euro joint venture (JV) with India's Force Motors Ltd. will be its key to incite truck sales outside MAN's home market in the next four years. The JV will manufacture 24,000 vehicles annually.