Volvo urges truck merger with Scania

VOLVO YESTERDAY urged Scania to merge with it and create the biggest truck and bus manufacturer in Europe after picking up a 13.5 per cent stake in its Swedish rival in a stock market raid.

A Volvo-Scania merger would produce a combined group with truck and bus sales of 130,000 a year, turnover of pounds 7.6bn and 50,000 employees.

In the market for heavy trucks of 16 tonnes and over, the merged business would leapfrog Mercedes Benz into the number one spot commanding 30 per cent of sales in West Europe. Worldwide, it would be the second biggest truck and bus company.

The controlling shareholder in Scania, Investor, reacted angrily to Volvo's move. Investor's chief executive, Claes Dahlback, described the pounds 385m share purchase as "unfortunate" and said it would make the merger discussions so far held between the two companies more difficult.

The discussions are thought to have stalled because of a dispute between the two companies over the valuation of Scania. Mr Claes said a merger with Volvo could produce significant synergy gains but there were alternative possibilities that were even more interesting which it would continue to pursue.

Volvo said it was interested in pursuing a "constructive dialogue" with Scania's shareholders, suggesting that a hostile bid was unlikely. However, it indicated it could launch a tender offer for the remaining shares. If that happened, it would pay the difference between the price at which it picked up shares yesterday and the final takeover price.

The move on Scania fuelled speculation that Volvo would sell off its car division in a deal with a volume car maker. It has appointed the investment bank JP Morgan to examine a sale and two possible partners are Ford and Fiat of Italy.

However, Leif Johansson, Volvo's chief executive, appeared to contradict this yesterday saying the strategy in cars was to be a niche player based on organic growth.

In 1997 Volvo produced 70,000 trucks and 12,000 buses while Scania produced just over 42,000 trucks and 4,500 buses. In the key heavy trucks market they each have a 15 per cent share compared with Mercedes Benz's 21 per cent. Any merger could run into trouble with European Commission competition authorities.

Karl-Erling Trogen, president of Volvo Truck Corporation, said there is a need for consolidation within the automotive industry and Volvo wants "to take part in this industry restructuring."

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world