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EU Proposal Threatens Volvo/Scania Merger

March 2, 2000

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A European Union regulatory panel reportedly submitted a proposal to block AB Volvo's acquisition of Swedish rival truck maker Scania AB.

Scania stock values fell 11.5% after reports that the EU Commission would likely follow an EU panel's recommendation to block the merger unless both companies made additional concessions. A Volvo spokesman recently told Reuters news service that negotiations are continuing but neither Volvo or Scania would comment on the EU panel's recommendations.
The EU Commission have said concessionary offers from Volvo and Scania are insufficient.
Analysts believe Volvo may have to sell its stake in Bilia AB, a Swedish dealership group, and its 10% ownership of Henlys Group Plc, a British bus manufacturer to win approval.
Some have said they'd like to see the deal fall through so Volvo would be free to buy other, more attractive, truck manufacturers. Additional industry speculation suggests that Volvo itself may by open to takeover by another firm such as Germany's MAN, Italy's Iveco, or France's Renault.

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The EU Commission is scheduled to make its decision at a meeting March 14 but it may be postponed until March 23.

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