Scania says it has appointed a committee to evaluate Volkswagen’s EUR6.7bn (US$9.2bn) to acquire the rest of the truckmaker.
Volkswagen has invested in Scania since 2000 and today indirectly and directly holds a total of 89.2% of the voting rights and 62.6% of the capital of the Swedish company.
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The German automaker says however, with the current ownership structure, it is “not possible to leverage the full potential of closer cooperation at an operational level between Volkswagen and Scania, as well as between MAN and Scania”, due to the legal restrictions in place to protect the minority shareholders in Scania, ‘at arm’s length’ principle.
“With its premium products, its strong market position and its technological expertise, Scania is a core element of the integrated commercial vehicles group we intend to accomplish under the umbrella of the Volkswagen Group,” said Volkswagen chairman, Martin Winterkorn.
“Our offer is designed to create a sustainable and clear ownership structure for Scania. This is a key step towards being able to fully exploit the advantages offered by the integrated commercial vehicles group for everyone involved.
“Our offer reflects this high strategic value. We are convinced it is very attractive for Scania’s shareholders and will create long-term value for Volkswagen.”
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By GlobalDataThe now planned full acquisition of Scania aims to remove what Volkswagen says are the “current obstacles to cooperation and enable key joint projects to be implemented more rapidly,” to achieve additional growth opportunities and synergies.”
Above and beyond the previously communicated synergies of more than EUR200m Volkswagen expects will be achieved by the end of 2014, the automaker is also estimating additional long-term synergy potential of at least EUR650m operating profit per year within the integrated commercial vehicles group.
However, in light of the long product life-cycles in the commercial vehicles industry, it will be ten to 15 years before this potential can be fully leveraged.
“The plan to fully integrate Scania into the Volkswagen Group follows a compelling industrial logic,” said Volkswagen Commercial Vehicles board member, Leif Ostling.
“It will significantly improve the capabilities, efficiency and flexibility of the commercial vehicles group comprising Scania, MAN and Volkswagen Commercial Vehicles, for example by implementing a common tool kit strategy similar to the one used in our passenger cars.”
There are no plans for structural changes at Scania, in particular in regard to its employees and the production locations and development centres.
“Volkswagen has a long and successful tradition of integrating strong brands into the Group while safeguarding their identity, their traditions, their strengths and a high degree of independence,” said Winterkorn.
“What we have achieved with either Audi or Porsche, we will attain with Scania. This means Sweden, Scania’s locations, and above all the employees of Scania, will play a central and strategic role in the integrated commercial vehicles group.”
The acceptance period for the offer to Scania’s shareholders is expected to start on 17 March and end on 25 April. The offer will be subject to, among others, the condition Volkswagen, through the offer, becomes the owner of more than 90% of the total number of shares in Scania.
After exceeding the threshold of 90%, Volkswagen will perform a squeeze-out and promote delisting of the Scania shares from the stock exchange.
Volkswagen will use the Automotive Division’s existing net liquidity to pay for the shares tendered by shareholders under the offer. Volkswagen will achieve partial refinancing through the issuance of new preference shares in the amount of up to EUR2bn using the existing authorised capital as well as issue hybrid capital.
“These measures will preserve Volkswagen’s solid financing structure following the transaction and provide sufficient net liquidity to safeguard its good rating,” said Volkswagen CFO, Hans Dieter Potsch.
“This is in the interests of our shareholders, because only strong, sound finances will give us the basis for continued profitable growth and the strategic capacity to act at any time.”
Scania says its independent committee will announce its opinion of the offer, including the reasons for the opinion, and valuation opinions, what it terms fairness opinions, from independent experts not later than two weeks before the expiry of the acceptance period.
The independent committee has appointed advisers of its own for legal, financial and communication issues.
