Scania and MAN in merger talks

Volkswagen AG is contemplating a merge of Swedish truck manufacturer Scania with German rival MAN. Such a move would create Europe’s largest manufacturer of heavy trucks and busses by market share.

Reportedly, Volkswagen moved one step closer to realise the long term aim to combine its stakes in MAN and Scania in an alliance that would overtake Daimler and Volvo as Europe’s leading truck manufacturers.

Responding to a weekend report in German newsmagazine Der Spiegel, the companies conceded that they had been discussing various projects in recent months, primarily discussions of potential synergies regarding research, purchasing and manufacturing. “This process has shown that a full realization of potential synergies requires a closer cooperation by combining the two companies,” commented Scania.

MAN, in contrast, dampened the Swedish enthusiasm. “Both sides are committed to maintaining the operating businesses and the unique brand values of the respective companies.”

Both companies stressed that no decision had been reached as various frictions occur. A Swedish takeover would ultimately run into German labor opposition. Juergen Weichsel, regional Bavarian head of Germany’s influential labor union IG Metall, said that it “clearly opposed a takeover of MAN through Scania”, preferring a Merger of Equals.

Yet Volkswagen, which has laid out an ambitious program to overtake Toyota as the world’s No. 1 auto corporation in 2018, fuels expectations. People close to the matter said that VW is considering a scenario in which Scania would serve as the vehicle for consolidating the stakes by taking over MAN. Under a multistage plan, it would first raise its 46% stake in Scania and then transfer its 30% stake in MAN to the Swedish rival, thus unifying its truck-production interests and creating a strong entity. Eventually, Scania would take over MAN.

After all, MAN and Scania share common characteristics. Both are premium brands influenced by Volkswagen, and both look back upon a honourable history. And both struggle maintaining their shares in a globalised market, as German newspaper Wirtschaftswoche reported. Asian corporations Dongfeng, First Automobile Works, Tata, and CNHTC outstrip the Establishment. VW’s foray would strengthen the renowned European competitors.

MAN, based in Munich, has a current market value of about $12.7 billion, while Scania, based in Sodertalje, Sweden, has a value of $17.1 billion. Based on sales for the first nine months of the year, Scania and MAN joint would have an almost 29 percent share of Europe’s heavy truck and bus market, followed by Daimler’s 21.4 percent and Volvo’s 22.6 percent, which includes its Renault Trucks unit, according to the European Automobile Manufacturer’s Association. Shares of MAN rose 6.1 percent after the potential merge was unveiled, while Scania’s B-class shares rose 1.3 percent. VW’s shares gained 2.4 percent.

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