SWEDEN: Scania woos shareholders with special dividend payment
In a bid to strengthen its resistance to MAN's takeover attempt, Scania has announced that it will make a special dividend payment to shareholders of 35 Swedish Krona per share, redistributing seven billion krona to shareholders.
The announcement came after Scania reported a 55% rise in third quarter net profit, from 825m krona a year ago to 1.28m krona in the most recent quarter.
Operating profit soared 67% to 2.02 billion krona from 1.21 billion krona, thus generating an operating profit margin of 12.2%, up from 8.3% in the same period last year. For the full year Scania said it is expected operating profit to exceed eight billion krona.
"By proposing to more than double dividends and issuing bright profit targets for 2006, Scania may influence shareholders to hold on to their shares, at least until MAN can propose a better deal," wrote Global Insight analyst, Thomas Ryard, in a research note.
On Sunday, Volkswagen's supervisory board agreed to endorse MAN's takeover attempt, as long as certain conditions are met. Volkswagen is now the largest shareholder in both MAN and Scania and supports a merger of the two companies in principle, but wants to retain a role in the new entity, and merge its Brazilian truck operations in the future.
By setting the condition that MAN must 56.01% of Scania voting rights, Ryard notes that Volkswagen is effectively placed in last position in the disposal order. This therefore puts pressure on MAN and Investor, Scania's second largest shareholder to agree an acceptable price for the acquisition.
"MAN will have to propose a minimum 510 krona per share to stimulate Investor AB's interest," said Ryard.