VW drops plans to take control of MAN at AGM

VW drops plans to take control of MAN at AGM

Frankfurt/Munich: Volkswagen dropped plans on Monday to take effective control of truckmaker MAN’s supervisory board, pressured by the European Union to hold off until it gets approval for a wider alliance.

VW wants to create Europe’s biggest truck maker by combining MAN and Sweden’s Scania to take on world No.1 player Daimler and its next biggest rival Volvo.

But the German carmaker, which has 31% of MAN, said it was withdrawing its proposal at MAN’s annual shareholders’ meeting on Monday to appoint its chief executive, Martin Winterkorn, its chief financial officer Hans Dieter Poetsch and trucks chief Jochem Heizmann to MAN’s board.

Instead, VW, which wants to raise its stake in MAN to 35-40% of voting rights to get regulatory approval for closer cooperation between MAN and Scania without buying the whole company, said it was in constructive talks with the European Commission and was confident it could submit the formal application for merger control clearance in the coming weeks.

MAN’s chief executive Georg Pachta-Reyhofen said he sees substantial synergies in any cooperation with VW and Scania and will allow the truck maker to expand its range to include vehicles weighing in at fewer than 7.5 tonnes.

Eventually, VW envisages saving about €400 million ($573 million) of costs in procurement, development and production by setting up a combined trucks group, but it has not yet provided details.

Shares in MAN were up 0.1% at €93.76 by 0902 GMT and Volkswagen was up 1% at €136.20. The STOXX Europe 600 Automobiles & Parts sector index was up 0.6%.

Making Promises

So far VW has vowed to keep jobs and sites and made vague promises not to touch the “brand characteristics" of MAN and Scania, but analysts expect VW’s chairman Ferdinand Piech, who is also chairman of MAN, to soon replace the carrot with the stick.

MAN sees its engines and the passenger cabin falling under its specific “brand characteristics" that should not be mixed with Scania’s, but analysts expect Piech to push for more.

VW, which aims to overtake Japan’s Toyota Motor as the world’s biggest automaker by 2018, has also been working to fold sports car maker Porsche into its business as a tenth brand, and Piech has also set his sights on Alfa Romeo.