MAN remains bullish over Scania bid

MAN struck a bullish tone over its €10.3bn hostile bid for rival Swedish truckmaker Scania as the German group presented record third-quarter results.

Hakan Samuelsson, MAN’s chief executive, said a 64 per cent increase in operating profit to €278m and a near-tripling of net income showed the truckmaker was performing at a “world-class level”, with productivity as good as any competitor.

He was responding to pointed claims by the head of Scania, Leif Östling, who two weeks ago said MAN needed to do its homework before it took over the Swedish group renowned for having the best margins in the sector. Scania has repeatedly rejected MAN’s bid as hostile and undervaluing the company, as has its second-largest shareholder, Investor. But Volkswagen, the carmaker that is the largest shareholder of both MAN and Scania, is leaning towards the German group, although it is officially remaining neutral.

Despite the rhetoric, senior managers from both MAN and Scania – but not Mr Samuelsson and Mr Östling – have met each other in recent days, people close to all the companies said. The two chief executives have spoken several times on the telephone.

The meetings are about trying to establish how many synergies could come from a combined group, but opinions differ as to whether any progress is being made. MAN and VW believe talks are going well, while Scania thinks the two sides “are a world apart”, these people said.

The two sides also disagree on whether an extended investigation from competition authorities at the European Commission is needed. MAN believes an initial investigation of 25 working days will be sufficient while people close to Scania’s board thinks a further 90- working-day probe will be needed. MAN intends to make its formal offer in about two weeks and hopes to wrap up the deal by the end of the year.

Mr Samuelsson appeared to crush the hopes of Scania investors awaiting a higher offer. He told the FT: “You shouldn’t expect any changes in the offer [when a bid is filed in mid-November].” He suggested some headquarter functions could be located in Sweden but refused to outline any other concessions that could be made to Scania.

MAN is one of the fastest growing companies in the sector, with an average of 6.3 per cent growth in the past decade, but Mr Samuelsson said he wanted the combined group to do even better: “There must be a balance approach to profit and growth.”

On the back of the strong results, MAN raised its full-year forecasts and is now aiming for a 10 per cent increase in revenues from €11.6bn in 2005 and a bigger rise in operating profits.

Speculation that Eckhard Cordes, the former head of Mercedes, could become chief executive of the combined group was dismissed. A person who spoke to Mr Cordes yesterday said: “He was not asked and is not interested.” People close to VW believe Mr Samuelsson is the favourite for the job.

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