Volvo Plans Merger With Food and Pharmaceutical Group

In one of Sweden’s biggest mergers, the Volvo automobile manufacturer plans to merge with Procordia, a major food and pharmaceuticals group, officials said Saturday.

Company officers intend to realize the merger through a public offering by Procordia to Volvo’s shareholders.

But the government Privatization Commission, set up recently to oversee the privatization of state-owned companies, has yet to recommend the move.

At a news conference shortly after Saturday’s announcement, Commerce Minister Per Westerberg said the government will examine whether the merger is taking place at “the right price, the right conditions and an industrial value.”

The commission has the power only to make a recommendation as to whether the merger should go through. But the Swedish government owns 34% of Procordia’s share capital, equal to 43% of the voting rights.

Volvo currently owns 40% of Procordia’s shares and also has 43% of the voting rights.

The government has no way of stopping the merger except by challenging Volvo in a shareholders’ vote. A shareholders’ meeting is scheduled for May.

Volvo, the largest industrial group in the Nordic region, has about 170,000 shareholders. The new group, to be called Volvo, would have total assets of about $22.3 billion and sales of about $19.7 billion.