Volkswagen AG is offering EUR6.7 billion ($9.2 billion) to acquire the remaining stake in truck maker Scania AB that it does not own as it seeks to deepen cooperation with its other commercial-vehicles units. Volkswagen already holds a majority stake in Scania as well as 89.2 percent of the voting rights.
The German carmaker is offering SEK200 ($30.6) per share, which is 36 percent higher than Friday’s closing price of SEK147.50 for Scania’s B stock. VW is seeking to finally be able to align Scania closer to its own commercial-vehicles business and truck maker MAN SE, targeting annual operating profit synergies of EUR650 million from joint projects between them.
VW has faced resistance from Scania's minor shareholders, who earlier this month requested for an independent auditor to determine whether ownership of the company by VW and MAN could mean a conflict of interest.
"It definitely makes sense to invest this money to remove the last hurdles for closer cooperation and reap the planned cost synergies," said Frank Schwope, an analyst with NordLB.
VW has enough funds to make the offer, having net liquidity EUR16.7 billion at the end of 2013 after raising EUR3.7 billion selling bonds convertible to preferred shares.
VW is planning to raise an additional EUR2 billion in funding by selling new preferred shares and by issuing hybrid capital. With Scania's shares surging 7.4 percent in the last 12 months, the Swedish truck maker is now valued at SEK116.8 billion.
According to VW, the offer is dependent on it gaining ownership of 90 percent of Scania, which it needs under Swedish law to pursue a buy-out. [source: BusinessWeek]