[Article] Porsche targets VW, which pursues Scania

Tabnabs

Europe could see a new automobile and truck empire emerge after Porsche got clearance from its board Monday to take a majority stake in Volkswagen _ just as VW said it would amass a controlling interest in Swedish truckmaker Scania.

The moves could put Porsche Automobil Holding SE _ which owns Porsche AG and a nearly 31 percent stake in Volkswagen AG _ in a position to also absorb a new commercial truck giant combining Scania with German truckmaker MAN AG, in which Volkswagen holds 29.9 percent.

Analysts said both deals boiled down to making money _ lots of it.

Porsche has been steadily raising its stake in Volkswagen for more than a year and won a significant victory last year when the European Union's highest court ruled that the German government had to remove a cap on voting rights at VW.

Porsche has not said when it would resume building its holdings in Volkswagen, only that it was now free to do so, and has said it does not plan to fully merge the companies. But the approval Porsche SE's supervisory board granted Monday for the company to raise its stake in opens up a realm of possibilities.

"Volkswagen has announced that they're taking a majority share of Scania. Next they could upgrade their stake in MAN to a majority stake, merge the two companies into a Volkswagen Commercial AG and sell that to Porsche SE," said Christoph Stuermer, an auto analyst with Global Insight.

"Then they could hand back to Porsche ... or to their stock owners, a special dividend from the revenues of that sale."

Holding company Porsche SE came into being after the sports car maker boosted its stake in VW to nearly 31 percent last year. Since the European court ruling, speculation had swirled over when Porsche actually might move to take a majority.

"The reviews by the regulatory authorities are expected to take several months," Porsche said in a statement. "As soon as the requisite clearances have been obtained, Porsche SE can acquire the majority of the shares in Volkswagen."

It added that "it is not planned to merge the two companies."

"Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition," Porsche Chief Executive Wendelin Wiedeking said.

Wiedeking has said that owning a majority stake would help Porsche work with VW _ whose brands include Audi, Skoda, Seat, Lamborghini, Bentley and Bugatti _ in developing new models, engines and other components.

Analysts also say Porsche having a dominant and controlling stake in Volkswagen could help improve VW's weak showing in the U.S. _ a key market for Porsche.

The next largest shareholder in VW is the German state of Lower Saxony, where the company's headquarters is located, which holds just more than 20 percent. That stake, along with what Porsche holds, means VW can afford not to worry about a foreign takeover.

Whatever uncertainty remains about Porsche's plans for Volkswagen, VW seemed certain of its plans for Scania, agreeing to pay at least $2.8 billion to buy key stakes in the Swedish truckmaker from Investor AB and the Wallenberg Foundations.

That deal could clear the road for new talks about merging Scania with German rival MAN AG, which had made a failed hostile bid worth 10.3 billion euros to acquire its rival. MAN abandoned that bid in early 2007 amid fierce resistance from Scania and its key shareholders.

But Volkswagen tried to dampen hopes about a merger between MAN and Scania right away.

"We are pragmatic people, which means that yes, of course we have recognized there could be some more potential in any combination, but does it make sense now to deal with any structures?" VW Chief Financial Officer Hans Dieter Poetsch said at a news conference in Sweden.

We don't believe so. ... Now first of all, let's digest the step we are undertaking and let's make the best out of it."

Were such a tie-up to happen, however, a combined MAN-Scania coupled with VW's own commercial trucks unit would easily overshadow rivals like Volvo AB and Daimler AG as Europe's biggest truck maker.

That could benefit a Porsche that held the majority of shares in Volkswagen, Stuermer said, since any net profits would flow back into Porsche SE's coffers in addition to solid results from VW that are already helping Porsche.

Volkswagen posted a 50 percent rise in 2007 net profit to 4.1 billion euros ($6.2 billion) last Friday, helped by record sales of nearly 6.2 million cars worldwide that lifted revenue 4 percent to 108.9 billion euros ($165.5 billion).

Both of the moves Porsche and VW announced Monday mark a stunning achievement for Ferdinand Piech, the dominant shareholder in Porsche who is also the chairman of the supervisory boards of both Volkswagen and MAN.

It was Piech's grandfather, Wolfgang Porsche, who designed the first Beetle and founded the company whose sports cars are found in the garages of the rich.

Porsche said Monday that Piech resigned from the steering committee of the company's supervisory board, but the position remained in the family. He was replaced by his brother, Hans Michel Piech.

Volkswagen shares closed up nearly 1.6 percent at 152.35 euros ($231.32), while Porsche rose 2.4 percent to 116.20 euros ($176.43). MAN shares gained 4.3 percent to 90.98 euros ($138.32).

Scania shares fell 8.5 percent to close at 156 kronor ($25.36) in Stockholm, where Investor shares rose nearly 1.2 percent to 129.75 kronor ($21.09).

___

Associated Press writers Malin Rising in Stockholm, Sweden, and Antje Homburger in Frankfurt, Germany, contributed to this report.

© 2008 The Associated Press

http://www.newsweek.com/id/118077/page/1

groupb

Volvo tried to take scania over before but europe said no because it was already associated with renault (which it now owns) and would have created a monopoly situation.As far as I know it sold its shares to VW at the time.
If memory serves me right VW have tried before to merge scania and man but a block was put in place by the EU.

unkel

But will the EU allow it?

It was Piech's grandfather, Wolfgang Porsche, who designed the first Beetle and founded the company

Wolfgang? I think the Associated Press means Ferdinand

Wolfgang is Piech's cousin...

JHMEG

Interesting.

I remember reading at the time that Porsche bought that stake in VW to stop it falling out of German hands, as another maker was "eyeing up" VW.

I never heard who it was, but I also read that Toyota has enough actual cash in the bank to buy any other car manufacturer.... So 2+2=?

Guy:Incognito

groupb wrote: »

Volvo tried to take scania over before but europe said no because it was already associated with renault (which it now owns)
.

Thats not right afaik. There was a crossover and swapping of engines and he like for a while a few years back but Ford own Volvo now, which would mean ford would own Renault if the above were true (and also have a large stake of Nissan)

colm_mcm

are Volvo cars and Volvo Truck & Bus the same thing though?

Guy:Incognito

colm_mcm wrote: »

are Volvo cars and Volvo Truck & Bus the same thing though?

Not sure TBH but as far as I know (as in I've never heard otherwise, havnt actually checked) Renault still own Renault trucks so Volvo (Ford) cant own that without owning Renault cars and the Nissan stake. Did Renault not buy Volvo stock at one stage when the crossovers were happening. I assume that was sold to Ford though when Ford bought Volvo.

Manufacturers should all just go back to making their own cars.:)

Tabnabs

Renault says no plans to reduce Volvo Trucks stake

GENEVE: French carmaker Renault has no intention of reducing its 22.2 percent stake in Volvo Trucks in a new round of consolidation in the sector as Volkswagen raised its stake in Scania to 69 percent.

The transaction between the German car group, Europe's biggest by number of vehicles sold, and the Wallenberg family could lead to a tie-up with truckmaker MAN in which Volkswagen also has a stake.

"We have a 22.2 percent stake in Volvo Trucks and there are no plans to change that," a spokeswoman for Renault said.
"It is probably the most profitable investment we have made," she said.

Renault obtained the Volvo Truck stake after it sold its own Renault VI (industrial vehicles) unit to the Swedish group. A cooperation pact on passenger cars fell apart and Volvo cars is now part of Ford.

http://economictimes.indiatimes.com/News/News_By_Industry/Auto/Automobiles/Renault_says_no_plans_to_reduce_Volvo_Trucks_stake/rssarticleshow/2834022.cms

rebel.ranter

I hope the whole sorry mess doesn't drag Porshe down the tubes. Look at Ford at the minute, they are on their knees, they tried to take over te automobile world & got dragged through the ire, Volvo, Mazda & Jaguar..... where did it get them?

Biro

Stekelly wrote: »

Not sure TBH but as far as I know (as in I've never heard otherwise, havnt actually checked) Renault still own Renault trucks so Volvo (Ford) cant own that without owning Renault cars and the Nissan stake. Did Renault not buy Volvo stock at one stage when the crossovers were happening. I assume that was sold to Ford though when Ford bought Volvo.

Manufacturers should all just go back to making their own cars.:)

No, Volvo cars is the part Ford own, while the BM division (I think that's the part that has the trucks and busses as well as the plant machines like loaders and shovels) remains by itself.
In general, all this buying stuff could eventually be bad for the consumer. It'll result in lack of competitors thinking up new and innovative ways of getting one up on their rivals.
Still, on the bright side for owners of the Scania R620 Topline - when you upgrade next time you'll be getting a Scania GT-TDI150 Topline! 1.9 diesel and 60 mpg easily!

G Luxel

volkswagen have their commercial range of which this Constellation is the flagship.

groupb

Stekelly wrote: »

Thats not right afaik. There was a crossover and swapping of engines and he like for a while a few years back but Ford own Volvo now, which would mean ford would own Renault if the above were true (and also have a large stake of Nissan)

Volvo trucks are an independant company , which took over RTI (renault Trucks) a few years ago , although , as was stated , Renault (cars)took a stake in Volvo as part of the deal. Scania and Volvo did'nt share engines. They have always been in opposition. Volvo trucks have nothing to do with Ford. Ford sold their truck making opperations years ago to Iveco in europe and to Sterling(now owned by mercedes) in the states.