That’s fine by VW. After all, the process is only a formality: the moment its
MAN stake tipped over 30 per cent last month, it had to launch a mandatory
offer. Once made, it can buy MAN shares on the open market at leisure.
Minorities, who chose VW supervisory board chairman Ferdinand Piëch as their
own a while back, can hardly protest.
MAN’s order book rebounded to 40,000 in the first quarter of this year, from a
disastrous 360-unit low in the fourth quarter of 2008, and it has other
attractions for VW. If it can acquire 35-40 per cent of MAN and Germany’s
antitrust authority approves, VW will no longer have to treat MAN as a
competitor, paving the way for closer co-operation with its Scania
truckmaker.
Benefits
The benefits are potentially greater than the required extra outlay of perhaps
€1.4bn. VW expects €200m of annual procurement savings, exactly the figure
for synergies from common sourcing that MAN touted during its 2006 tilt at
Scania. Savings from engine and chassis development could take longer, given
product cycles of about 15 years.
Improved access to new markets is not assured, given owner loyalty and local
competition. MAN and Scania (which would jointly be about the size of Volvo)
are both strong in Brazil, and MAN is number one by imports in Russia. But
India and China, with huge domestic producers, are tough nuts to crack.
Operating improvement is one thing, but financial benefits will come only with
a full merger, with MAN as the Audi of trucks and Scania as the
higher-margin Bentley in VW’s portfolio. Once the MAN bid is in the rear
view mirror, that could be closer than it appears.
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