Volvo urges truck merger with Scania
Saturday 16 January 1999
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."
- 1 Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 2 Disney announces new female-led film Moana
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Video: Boxer Vido Loncar brutally assaults referee following defeat
Chicago voter tells Obama 'don't touch my girlfriend' – Obama stays super smooth
Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Support for EU membership 'at highest level since 1991 with most Brits wanting to stay in'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...