AB Volvo of Sweden, which appears to be at the brink of failing to acquire all of the assets of
Scania AB for $6.93 billion in cash is said to have opened exploratory talks with Paccar Inc. and Volkswagen AG of Germany about a possible white-knight rescue of Volvo.
A Paccar spokesman declined to comment on the reports. But the price of Paccar common shares soared by nearly 12 per cent today in over-the-counter trading Friday. Volkswagen officials were not readily available for comment.
SNS sources confirm the Commission of the European Union, a western European antitrust regulatory authority, asked representatives from its 15 member nations to support a formal rejection of the proposed cash purchase of Scania by rival Volvo.
The Volvo-Scania deal is "dead in the water," a source confided. He was not more specific.
Sources also confirmed that the EU commission decided that concessions offered by Volvo to acquire Scania are insufficient to meet monopolistic concerns that a merged Volvo-Scania will
sharply reduce competition in the commercial truck and bus markets throughout Western Europe. An EU regulatory panel submitted the proposal yesterday to block the merger. Volvo and Scania have declined to comment on the development.
Volvo, concerned that unspent cash generated from the early 1999 sale of its car-making operations to Ford Motor Co. may transform it into a takeover target if the Scania acquisition
falls through, reportedly initiated talks with Volkswagen about a possible takeover. Volkswagen approached Volvo two years ago about a similar transaction.
Paccar may have approached Volvo about a similar transaction. It had $1.04 billion in cash on hand at the end of last year.
Meanwhile, Volvo and Scania previously offered to open their service networks to rival truck sellers, and reportedly intended to sell selected parts-making factories as well as Volvo's 36.8
percent stake in Swedish auto retailer Bilia AB, in a prior "insufficent" bid to gain approval of their merger from the EU commission.
Under EU merger rules, it may be too late for the company to offer any additional concessions to gain approval for the merger.
Volvo also opened exploratory talks nearly five months ago with Renault SA of France about the possible purchase of its commercial truck and diesel engine-making assets but relegated
the takeover discussions to the back-burner until Volvo completed its pending cash acquisition of Scania, which now is at the brink of collapse.
The EU commission is scheduled to decide whether it will allow the merger at a meeting this March 14.
The EU commission said Volvo and Scania together would control about 93 per cent of the truck market in Sweden and more than 50 per cent of the market for all of Scandinavia. A combined firm also would hold more than 40 per cent of the bus market in Britain.
Such extensive holdings are cause for monopoly concerns, the EU said.