Investor chairman says Scania and MAN should resume merger talks

Truckmakers MAN AG and Scania AB should regroup and resume their failed merger talks, the chairman of Swedish investment group Investor AB said Wednesday.

Photo: Investor chairman says Scania and MAN should resume merger talks

Speaking on the sidelines of the World Economic Forum's annual meeting, Jacob Wallenberg said the two companies should take a "short break" before any talks resume. Investor AB is one of Scania's major shareholders.

MAN backed out of its Ђ10.3 billion (US$13.43 billion) hostile bid for Scania on Tuesday after both Investor and Volkswagen AG, Scania's biggest shareholder, rejected the bid.

"There should be a renewed, amicable discussion," Wallenberg told Dow Jones Newswires.

So far, MAN has refused to raise its bid for Scania to satisfy Investor and Volkswagen.

Wallenberg declined to say whether he expected a higher offer from MAN or if another suitor for Scania was waiting in the wings.

Volkswagen holds 34 percent of the voting rights in Scania while Sweden's Wallenberg family holds 31 percent of the voting rights through Investor and other family holdings.

MAN is Scania's the third-largest shareholder, with 14.5 percent of its voting rights. Volkswagen is also MAN's largest shareholder with a stake of about 20 percent.

Scania has remained mum about its options, saying it is too soon to discuss what kind of partnership with MAN could be considered.

Analysts said the Scania-MAN saga is far from over, and that some kind of merger remains likely despite the failed bid.

"That was phase one, now we enter phase two, which means discussions to see if there is any logic in merging these companies," which includes friendly talks to see if there is a mutual gain in a merger, said Anders Bruzelius, an analyst with Swedbank in Stockholm. "And there likely is. All sides have demonstrated that there is an industrial logic" in a fusion.

Such discussions could drag out for months, so the market should not expect a quick closure to the affair, he said.

Glitnir analyst Ola Asplund said a counterbid by Scania to acquire MAN remains a possibility, while the Swedish truckmaker could also seek out a partnership with an American rival instead to gain an entry on the U.S. market.

"There could be more sales synergies in that," Asplund said.

Scania shares gained 1.1 percent Wednesday to 470 kronor (Ђ51.62; US$67.31) on the Stockholm exchange.

Sweden's Prime Minister Fredrik Reinfeldt reiterated his desire for Scania to remain a Swedish company, reports AP.

"We should take care of our industrial crown jewels, and can only hope that Scania will now remain under Swedish ownership with its headquarters in Sweden," Reinfeldt told news agency TT.