Volvo, Scania Break Off Negotiations
February 23, 1999
Sweden’s Volvo has broken off negotiations to buy rival Swedish truck maker Scania.
Volvo issued a press release noting “the conditions for reaching an agreement do not exist at the present time.” According to published reports, the deal is off because Investor, the principal owner of Scania, was demanding too much money.
Volvo had been seeking control of Scania since January, when it bought a 13% stake in the company and said that it planned to buy the rest. Volvo says it bought the shares because discussions with Investor led it to believe that Investor was considering withdrawing as the principal owner.
In an apparent change of heart, Investor declared that Scania can survive on its own and asked Volvo to sell its 13% stake in the company. “To have your strongest competitor as one of the largest owners is, in the long run, unsuitable for Scania,” said Investor chief executive Claes Dahlbaeck.
Volvo says it doesn’t plan to sell the shares and is leaving the door open for the future. Volvo Chief Executive Officer Leif Johansson noted that the company is “in no hurry.”