Swedish Panel Studies Plan to Link Volvo, Procordia : Merger: The proposal to join the food and drug group with the auto maker would result in one of Europe’s biggest concerns.

A government panel will meet today to scrutinize the proposed merger of auto maker Volvo and food and drugs group Procordia, but it may not be able to stop the controversial $6.7-billion deal.

Sweden’s center-right government, which controls 42.7% of Procordia’s voting stock, appeared wary of the deal, which threatens to complicate plans to sell state holdings in industry to the general public and employees.

“They should have anchored the deal with us first,” Industry Minister Per Westerberg said.

He said the government has not decided whether to support the plan, announced Saturday, which would leave the state with a 25.6% stake in the new company.

But he said the government is likely to follow the advice of its privatization commission, which meets today.

Meanwhile, the opposition Social Democrats and labor unions praised the planned merger as a way to secure jobs and protect the two companies from foreign takeover.

Industry analysts gave mixed reviews.

“The merging of Volvo and Procordia is one of the oddest company deals in years,” analyst Peter Malmqvist wrote in national daily Svenska Dagbladet. “There are virtually no industrial coordination advantages.”

The new company, which will carry the Volvo name, would be one of Europe’s biggest concerns, with annual revenue of about $20 billion and 105,000 employees.

“The new giant concern should really be called Sweden Inc.,” an article in national daily Aftonbladet said.

Under the bid, Procordia will offer Volvo shareholders nine shares for four of their own in a stock swap valued at $6.7 billion.

Volvo Chairman Pehr Gyllenhammer would be chairman of the merged group, and Procordia Managing Director Soren Gyll would be chief executive.

“Volvo will secure a better cash flow and Procordia may be able to surf on the Volvo name internationally,” Foreningsbanken chief analyst Ulf Hellzen said.

Like car companies around the world, Volvo has been hit by the economic downturn and posted an operating loss of $217.5 million in its most recent nine-month reporting period on sales of $9.6 billion.

Westerberg, the industry minister, said the privatization commission has already rejected a previous merger bid because it believed that the valuation of Volvo’s shares was too high and that it collided with privatization plans.

But the merger could happen over the objections of the government, because Volvo also has a 42.7% voting stake in Procordia and could probably put together enough votes to gain a majority of the shares.

Procordia reported a 23% rise in nine-month net profits to $531.7 million on revenue of $5 billion.