Volvo Moves to Buy Truck Maker Scania
Sweden’s Volvo said on Friday it has offered to buy rival truck and bus maker Scania for about $7.5 billion after striking a deal with Scania’s main shareholder, Investor, which had resisted its advances for several months.
The deal, which would create the world’s second-largest maker of heavy trucks, appears to end a drama that began when Volvo unexpectedly bought a 13.5% voting stake in Scania in January and said it wanted to buy the rest. Scania and Investor opposed that, on the grounds that a takeover had little industrial logic, but Volvo kept buying shares.
“I am very pleased that an agreement with Investor has now been reached on mutually beneficial terms,” Volvo Chief Executive Leif Johansson said in a statement.
“A competitive company with two of the industry’s strongest brands is being created, with major development resources and volumes, particularly in the critical diesel engine segment.”
The merged group would have 31% of the European heavy-truck market, second only to German competitor DaimlerChrysler. It would also get 19% of the global market, behind DaimlerChrysler’s 25%.
After buying Investor’s stake in Scania, Volvo said it had 49.3% of the company’s capital and 69.6% of its votes. Volvo is offering to buy the remaining Scania shares for $38.60 each in cash, or for six newly issued Volvo shares for five Scania shares.
The cash offer is a 29% premium over Scania’s closing share price on Thursday, and the share swap is a 20% premium.
Both Scania and Investor said they were pleased with the outcome of the deal, without giving any reasons for the change of heart.
Volvo began its push to acquire Scania in January, several weeks before announcing the sale of its passenger-car division to Ford Motor Co., as part of an effort to concentrate on commercial vehicles. In a move that shocked Swedish business circles, Volvo bought 13% of the shares in Scania and began negotiations with Investor.
At the time, Scania Chief Executive Leif Oestling said he regarded Volvo’s move as “close to hostile.” But on Friday, he characterized Volvo’s acquisition with a combination of resignation and optimism.
“The situation is what it is,” he said at a news conference. “The tide is turning on this question, and we are looking forward. . . . Presumably the affair is good both for the two companies and for Sweden.”
Investor said the deal would give it up to 13% of the voting rights in Volvo but gave no capital estimate.
Volvo has about 52,500 employees worldwide and Scania 23,500. Johansson declined to speculate on how many jobs might be eliminated in the merger.
The deal must be approved by the European Union.
