Porsche launches bid for VW

Yesterday (Monday) was a day to remember for Volkswagen, Europe's biggest carmaker. Just hours after announcing it had taken a controlling stake in Swedish truck maker Scania, VW was on the road to being taken over itself.

Sports car maker Porsche announced it had launched steps to take a majority stake in its German rival in a move that left analysts guessing whether the timing was coincidence or intentional.

By taking almost 70 per cent of Scania's voting rights, VW finds itself in a position to realise its long-held dream of merging the Swedish concern with Germany's MAN AG to create Europe's biggest manufacturer of commercial vehicles.

Scania shareholders Investor and the Wallenberg family had been the main opponents of such an alliance, blocking a previous takeover attempt by MAN in 2006.

VW, Scania's biggest shareholder, also opposed the merger then because it wanted to be in the driver's seat. Instead VW purchased a stake in MAN and bid its time.

Negotiations went on the in background between representatives of the Wallenberg family and VW supervisory board chief Ferdinand Piech, who has made no secret of his desire for a broad-based concern making everything from compacts to sports cars and trucks.

But it will be sports car maker Porsche that will in future have the say at VW, following its declared intention to increase its stake in Volkswagen from just under 30 per cent to over 50 per cent.

"Our goal is to create one of the world's most innovative and efficient automobile alliances that will be able to meet the growing international competitive challenges," Porsche chief executive Wendelin Wiedeking said after a meeting of the company's supervisory board.

Piech also has a stake in Porsche, but it is unclear how much influence he has in the company.

German car industry expert Ferdinand Dudenhoeffer believes Porsche's hand was forced by VW's moves towards a manufacturing alliance in the commercial vehicles sector.

Such a move makes sense, according to Dudenhoeffer. Even though VW says it is not considering a merger with MAN for the moment, there is no doubt it is interested in close cooperation, in the fields of research and development as well as production.

"It is possible to achieve a lot of synergy" as long as the parties concern act quickly, said Duddenhoeffer. But it is more important to find a person to "take charge of the alliance," he added.

Volkswagen chairman Martin Winterkorn told reporters in Stockholm that the $US4.38 billion ($A4.7 billion) VW paid for just over 30 per cent of the Scania voting rights was "a fair price for this unique and high-performing company."

Borje Ekholm, chief executive of Investor, which has close ties to the influential Wallenberg family, said it "was not easy" to end a 90-year involvement with Scania and sell.

But the move was made easier by the fact that the market value of Scania had increased some 40 per cent since the MAN bid.

The departure of the Wallenbergs means the automobile industry in Sweden is almost exclusively in foreign hands. Only Volvo trucks are produced under domestic ownership. Volvo's car segment was bought by Ford almost a decade ago.

Source: AAP 2008

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