kedes form 14.59bn pact
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• by Peter Lawton
Volvo is taking over Scania, creating Europe's largest heavy truck manufacturing company, second only to DaimlerChrysler worldwide. The £4.59bn pact between Volvo and Scania's biggest shareholder, investor, ends months of speculation started by the surprise buy of 12.85% of Scania in January
Subject to approval from the European Commission, Volvo will take all Investor's 55,570,073 shares to secure 49.3% of the capital and 69.6% of the voting rights in Scania.
Volvo chief executive officer, Leif Johansson, says: '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 company expects to make substantial savings through greater purchasing power and joint development, with engines and transmissions already identified as key areas for co-operation. But both brand identities are to be retained. The new mega-company, is expected to take around 30% of the European market. Distribution and dealer networks will remain separate, says Volvo.
Volvo spokesman Stefan Lorentzson says: "I don't think the Idea is to ever share a common platform but to have the synergies in terms of purchasing and devel opment.' Lorentzson also brushed aside rumours that Scania's president Leif Ostiing could soon be out of a job, saying he was to join the new company's executive committee and work with Volvo and Investor chiefs. "He was hostile at the outset,' says Lorentzson, but he seems to have changed his mind now.'
()sting warned in May this year that a merger between the two companies threatened 15,000 jobs and sales of 30,000 units. Utf Soderstrom, spokesman for Scam, says: 'It is important Volvo has been listening to the risks we have been pointing out. We were focused on how our customers would react to this merger, and this is something we feel Volvo has really listened to.
"It has said it will keep the brands separate, and by doing this we will have a much better chance of keeping up volumes."
Economic pundits say the merger will step up the already fast pace of consolidation within the industry. They also predict job cots and a loss of market share for both Volvo and Scania in Northern Europe.
Several offers for Investor's shares were made before a price of SwKr 315 (£24) each was agreed. Other Scania shareholders are being offered that price. They include foreign investors at 9.2% and a Swedish bank (2.7%).