Volvo Breaks Off Talks With Rival Scania
Leif Johansson, chief executive officer at Volvo, said the talks with Scania’s major shareholder, Investor AB, have ended for now because the conditions are unsuitable to reach an agreement.
“I cannot express an opinion on the conditions for possible future discussions with Investor in this matter, but we are in no hurry,” he said.
Volvo paid $650 million for a 12.85% stake in Scania in January. Johansson said Volvo decided to buy the stake because it thought Investor was considering withdrawing as the principal owner of Scania and would be receptive to an offer.
Scania is reportedly still in talks with Volkswagen AG. Officials at the German automaker have expressed a desire to add a heavy truck line to its car and light truck offerings.
Many experts think a merger between Volkswagen and Scania, which only builds Class 8 trucks, makes more sense than one with Volvo, which already has a similar line of heavy trucks.
The decision to cut off talks with Investor will likely intensify Volvo’s efforts to expand its truck business through other acquisitions. The company is expected to receive about $6.5 billion from the recent agreement to sell its car division to Ford Motor Co.
John Lawson, an analyst at the brokerage firm of Salomon Smith Barney in London, said a good management team like Volvo’s “must have a plan to recycle that money.”
It was reported that Volvo and Navistar held talks on a possible merger.
“Volvo has clearly declared its intention to participate actively in the ongoing consolidation in the commercial vehicle industry,” Johansson said.
“The decision to terminate discussions does not imply any changes in this objective, and we are now going to proceed with the work of strengthening Volvo’s position,” he said.
