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VW Sets Preliminary MAN Offer in Push for Full Control


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Bloomberg / March 22, 2013

Volkswagen AG, Europe’s largest carmaker, made a low-ball initial offer to other holders of MAN SE stock as it pushes for full control of the German truckmaker.

VW, which already owns 75.03 percent of the Munich-based company’s voting rights, will offer 80.89 euros ($104.34) per share, a 7.1 percent discount to MAN’s closing price yesterday, according to a statement yesterday from the truckmaker.

Shareholders that don’t accept the cash offer will receive a guaranteed annual dividend of 3.07 euros per share. VW and MAN will agree on final conditions after they receive full valuation reports from auditors, the truckmaker said.

“Cash compensation came in clearly below our and market expectations of around 95 euros,” Michael Punzet, an analyst with DZ Bank in Frankfurt, said today in a note. “We don’t expect high acceptance for the cash offer,” considering the dividend yield is about 3.8 percent.

Volkswagen is pushing for deeper integration between MAN, its own commercial-vehicles unit and Swedish truckmaker Scania AB, which it
also controls with a 70.94 percent stake, to leapfrog ahead of Volvo AB and Daimler AG as the biggest producer of heavy trucks in Europe.
A completed deal would allow VW to fully integrate MAN into its operations.

MAN’s common shares fell as much as 4.3 percent to 83.36 euros and were down 4.1 percent at 9:33 a.m. in Frankfurt trading. Before the offer, the stock had climbed 7.9 percent this year, valuing it at 12.4 billion euros. VW shares rose 0.6 percent to 156.10 euros.

Domination Goal

The Wolfsburg, Germany-based automaker said in January that it would talk with MAN’s board to discuss its goal of seeking a domination agreement. The deal has to be approved by both companies and by the truckmaker’s shareholders meeting, which is scheduled for
June 6.

VW is legally required to look at the average price of the shares in the last three months and the value of the stock based on an independent evaluation of the company, and offer MAN shareholders the higher of the two figures. KPMG and PricewaterhouseCoopers
are conducting the assessments.

MAN, Europe's third-largest truckmaker, said it may slow investments and will work to cut spending this year as the region’s shrinking economies cause earnings to drop faster than sales. MAN last month forecast a “disproportionately large” operating profit drop this year as sales suffer a“slight” decline.

Enough Votes

VW, which already holds enough votes to push through the deal at an MAN shareholders meeting, owns 73.7 percent of the total share capital. The preliminary offer values the outstanding stock at about 3.3 billion euros. VW spokesman Marco Dalan declined to comment beyond the MAN statement.

Volkswagen announced a management reshuffle last June meant to push forward the truckmaking cooperation. As part of the changes, Leif Oestling gave up his post as CEO of Scania to join Volkswagen's management board and help forge the alliance. MAN CEO Georg Pachta-Reyhofen is now overseeing the group’s industrial engines business, along with his duties running the truckmaker.

Volkswagen has been working for six years on closer ties with MAN and Scania. Volkswagen increased its holding in MAN to a majority in 2011, then raised its stake last June to its current level.

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