Volvo to Buy Scania for $7.4B

Volvo will buy longtime rival Scania in a $7.4 billion deal, creating the world’s second-largest manufacturer of heavy trucks and buses. The agreement was announced early Friday in Stockholm, Sweden.

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The deal had been discussed since January, when Volvo bought 13% of the shares in Scania. But with the help of its major stockholder, Investor, Scania resisted Volvo’s control, as it did when Volvo increased its stake to 20% in May.

Investor is the investment arm of Sweden’s powerful Wallenberg family.

For 60.7 billion Swedish crowns, roughly $7.44 billion, Volvo gets Investor’s 69.6% of the votes in control of Scania.

Rumors had swirled around Volvo’s investment plans since it sold its passenger car division to Ford for $5.8 billion in January. The rumors usually paired Volvo with Scania, although speculation concerning Navistar International was raised in early March.

Volvo has 52,500 employees, and Scania has 23,500.

The combined companies will be second only to DaimlerChrysler in sales.

DaimlerChrysler’s truck, van and bus divisions had sales of $26.7 billion worldwide in 1998, while Volvo and Scania totaled $15.8 billion.