January 10, 2013 12:02 am

VW to make offer for rest of MAN

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Volkswagen will offer to buy out the remaining shareholders of MAN, the German truckmaker and engineering company in which it holds a majority interest, as part of an agreement to further its goal of creating an integrated commercial vehicles group.

VW, Europe’s biggest carmaker by sales, said it would conclude a domination and profit and loss transfer agreement – a move to give it full strategic and financial control over MAN – to strengthen co-operation in its commercial vehicles business. This business also includes truckmaker Scania.

VW holds 75 per cent of the voting rights of MAN. It is not clear what percentage stake VW will achieve with its move, because shareholders are not obliged to accept the offer.

Frank Schwope, an analyst at NordLB, told Reuters that he expected VW to aim for between 95-99 per cent of MAN shares.

The decision ends a years-long saga in which Ferdinand Piëch, VW chairman, sought to bring together VW, MAN and Sweden’s Scania as part of one of the world’s most diverse automotive groups.

Today that empire stretches from premium carmaker Audi to low-cost Skoda and Ducati, the motorcycle maker.

VW first acquired a stake in Scania more than a decade ago. Later, MAN’s ill-fated and acrimonious attempt to take over Scania allowed VW gradually to take control of MAN.

The offer price for the remaining MAN shares subject to the domination agreement has not yet been determined.

That process will be overseen by an auditor who will consider the average MAN share price over the past three months as well as the dividend discount value. VW will make MAN shareholders a cash offer and those who decline it can keep their shares and receive a dividend.

MAN’s market capitalisation is about €12.1bn, valuing the remaining stake at about €3bn. VW had more than €9bn in net cash at the end of September. MAN’s shares have gained about 19 per cent since October, and closed up 2 per cent at €84.03 Wednesday.

The move would give VW access to MAN’s cash flows and could help accelerate co-operation with Scania and help it to better challenge rivals such as Daimler and Volvo. Truckmakers are facing a tough environment in Europe and Brazil as the economy has slowed and due to new emissions regulations.

VW appointed Leif Oestling, former Scania chief executive, in September to head the commercial vehicles business on VW’s board. VW hopes to conclude the domination agreement this year. The group said MAN would retain its brand identity and business focus.

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