The dispute between MAN SE (the truckmaker that Volkswagen AG controls) and International Petroleum Investment Co. has been resolved by a buyback of former unit Ferrostaal, making it possible for VW to enter the largest commercial-vehicle tie-up in Europe.
In a statement, the company said that MAN will pay 350 million euros ($465 million) to pay Abu Dhabi's IPIC to buy back a 70% share in Ferrostaal, resolving all the claims. All of Ferrostaal will then be sold by MAN to Muenchmeyer Petersen & Co. GmbH for up to 160 million euros. Since 2009, German prosecutors have been investigating Ferrostaal, which handles the development of industrial and petrochemical plants, due to reports that bribes were paid to win contracts.
In the past, VW said that the ongoing investigations at Ferrostaal were preventing efforts to integrate MAN with Swedish competitor Scania AB, which is also controlled by VW. Frank Biller, an analyst with Landesbank Baden-Wuerttemberg in Stuttgart, Germany, said that VW had always worked to lessen the possible risks. He believes that this settlement eliminates whatever pending legal qualms there are. He also said that there are no more obstacles left for VW to pursue joint projects with MAN and Scania.
In this statement, MAN Chief Financial Officer Frank Lutz said that the company is “pleased” to having been able to conclude talks with IPIC on a conciliatory note with an outcome that everyone accepts. He added that Ferrostaal is now on track to succeed at its new start.
MAN’s Stefan Straub said that the deal with IPIC doesn’t have an impact on VW's intention to have a closer cooperation between MAN and Scania. Straub said that the agreement won’t influence MAN’s fourth-quarter results as the company is prepared to cover any risks. [source: Bloomberg]