VW ups MAN stake to 29.9 percent, seeks MAN/Scania deal

By From Reuters| Feb 28 2007
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HAMBURG (Reuters) -- Volkswagen AG has boosted its stake in Germany's MAN AG to 29.9 percent, VW said today, stepping up pressure on MAN to merge with Sweden's Scania AB.

Analysts said the move could set the stage for a takeover of MAN, creating the European truck market leader, if efforts to forge a deal after months of bitter squabbling don't advance.

"The board of management of Volkswagen is convinced that this level of participation in MAN is both helpful and adequate to allow all parties to find a friendly and mutually agreeable solution for combining MAN and Scania," VW said.

"Realizing the acknowledged high synergy potential remains the objective," it added.

Scania spokeswoman Cecilia Edstrom said it was too soon to say how VW's purchase of additional MAN shares would affect the prospects for a merger between the two rivals.

"Our main task is to focus on our operations. We will also consider any new proposals if and when they land on the table, but that has not happened yet," she said.

VW, Europe's biggest carmaker, had held around 20 percent of MAN before increasing its holding on Monday, Feb. 26. It is also the biggest shareholder in Scania, with 18.7 percent of the capital and 34 percent of the voting rights.

MAN was forced to drop a hostile $13.1 billion (10.3 billion euros) bid for Scania last year when Scania management and its main shareholders, including Sweden's Wallenberg family, refused to go along with the deal.

ENTER PIECH?

MAN, which has a 14.8 percent voting stake in Scania, has said it would try for a friendly deal once tempers cool.

"Now MAN has a large shareholder again and we will resume the cooperation talks as announced," a MAN spokesman said.

Volkswagen is widely regarded as the kingmaker in any deal that could also include VW's heavy truck business or its entire commercial vehicles division.

Industry sources said last week it wants to get three seats on MAN's supervisory board and that VW Chairman Ferdinand Piech wanted to become MAN chairman as well. MAN's supervisory board is up for election at the annual general meeting on May 10.

Speculation continues to swirl the Wallenbergs or their Investor AB vehicle could take a stake in MAN to gain leverage in the negotiations.

Analyst Juergen Pieper at Bankhaus Metzler thought it probable MAN would face a takeover offer from either Volkswagen or Scania.

"If the talks are stalled for a long time then one of the sides has to act," he said. "In the extreme case it is conceivable that VW bids for MAN as well as for Scania."

MAN works council head Lothar Pohlmann said efforts toward a truck alliance were moving forward "with ever larger strides". Asked if he could imagine Piech as MAN chairman, he said: "Under some conditions. We can clear these up when we are ready."

Former VW CEO Bernd Pischetsrieder is Scania chairman now, but a source familiar with the situation told Reuters on Monday he would be replaced by current VW CEO Martin Winterkorn at the next annual meeting.

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