Volkswagen bid questioned by Scania mayor
STOCKHOLM: When the mayor of Scania’s home town learned late Friday of Volkswagen’s plan to take full control of the truck maker, she hit the phones.
The more-than 9,000 workers Scania employs in Sweden make up about 10 per cent of the population of Soedertaelje, a town some 20 miles southwest of Stockholm. Mayor Boel Godner, who’s in regular contact with Scania because it’s her town’s biggest private employer, says her main concern now is whether all those jobs will survive an offer by Europe’s largest automaker to buy the Scania shares it doesn’t already own.
“Every event involving Scania creates worries until we know what kind of changes they may lead to,” Godner said in an emailed response to questions. “I follow everything involving Scania intensively.” The mayor says she had members of Scania’s executive team on the phone Friday night to discuss VW’s plans. She declined to comment on the outcome of those conversations.
Some of Sweden’s biggest employers are cutting thousands of jobs to stay competitive. Volvo, the world’s second-largest truck maker, said this month it needs to eliminate 4,400 positions to save money. As Swedes prepare to vote in September elections, the government of Prime Minister Fredrik Reinfeldt has made bringing down Scandinavia’s highest unemployment rate a key plank of his campaign. Joblessness rose to 8.2 per cent last month, Statistics Sweden said Feb 13.
“Scania
is
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Every event involving Scania creates worries until we know what kind of changes they may lead to. I follow everything involving Scania intensively. Boel Godner, town mayor
importance to Soedertaelje and for the Swedish export industry,” Godner said. “Everyone in Soedertaelje has a relation to Scania.”
VW, which offered 6.7 billion euros ( RM30 billion) for the rest of Scania, says it needs full control of the company to save money and improve its business. To achieve that, “Sweden, Scania’s locations, and above all the employees of Scania, will play a central and strategic role in the integrated commercial vehicles group,” Chief Executive Officer Martin Winterkorn said in a statement.
Since becoming CEO in 2007, Winterkorn has overseen acquisitions of sports- car maker Porsche, Ducati and commercial vehicle maker MAN SE. None of those deals led to mass job cuts.
VW Chief Financial Officer Hans Dieter Poetsch said Feb 21 Scania will keep its headquarters in Sweden and remain an independent brand within the group. Still, Scania has rejected takeover offers in the past. In 2006, an unsolicited bid by MAN under then CEO Hakan Samuelsson to buy Scania was actively opposed by Swedish labour unions. The attempted takeover failed and VW raised its stakes in both MAN and Scania in the following years.
Though VW’s latest bid represents a 36 per cent premium on the Feb 21 closing price of Scania’s B shares, a number of minority shareholders raised doubts.
“Scania’s prerequisites to maintain its leading position are better as a listed company than as a subsidiary in a larger group,” Caroline af Ugglas, head of equities and ownership at pension provider Skandia, which is Scania’s seventh-largest shareholder with 0.8 per cent of the stock, said in an e-mailed response. “Skandia doesn’t intend to accept the offer.”
Alecta, the fifth-largest shareholder with two per cent of Scania’s stock, says it will “evaluate the bid carefully, from all aspects.” Swedish pension fund AP4 said the offer “must be evaluated in light of the duty we have to our pensioners and it is not obvious that that is the stock market price plus a few per cent.”
VW is offering 200 kronor per share, compared with the Feb. 21 closing price of 147.50 kronor for Scania’s B shares. The stock has gained 7.4 per cent in the last 12 months through Feb 21, valuing the Swedish truck maker at 116.8 billion kronor.
Scania rose as much as 35 per cent to 198.9 kronor in Stockholm trading, its steepest advance since October 2008. It added 32 per cent to 195.4 kronor at 9.20am local time.
VW only plans to pursue the bid if it can secure 90 per cent of the shares in Scania, which the German automaker needs under Swedish law to force remaining minority owners to sell their stakes. VW currently controls 62.6 per cent of the share capital.
Scania’s hometown is struggling with a jobless rate that’s almost twice the national average; unemployment reached 14.3 per cent in October.
The town is known locally as Little Baghdad following an influx of Middle Eastern immigrants that started in the 1960s. Many of these people now provide the backbone to a base of industrial workers anxious about the prospect of foreign ownership of their biggest employer.
“If the VW deal would result in jobs disappearing to other cities or countries, it would be a big blow to the city,” said Afram Yakoub, chairman of the Assyrian Federation of Sweden. “Many are of course worried about what could happen despite reassurances from VW. I think many people in Soedertaelje would feel safer if there was continued Swedish influence in the company.”
Dagens Nyheter, Sweden’s biggest morning newspaper, in an editorial piece today dubbed the German auto maker’s bid “part of the VW patriarch’s imperial dreams.”
“That Scania becomes wholly owned by Volkswagen is not good for either Scania, Soedertaelje or Sweden,” Dagens Nyheter said. “VW’s guarantees that the jobs will remain in Sweden don’t apply in the long-term.”
Back at the town hall, Godner urged VW to keep the future of her local community in mind.
“It’s important that the owners realise how incredibly important Scania is for Soedertaelje and Sweden,” Godner said. — WPBloomberg