Scania reiterates rejection of offer as MAN begins buying shares

Nordic Business Report, Oct 12, 2006

NORDIC BUSINESS REPORT-12 October 2006-Scania reiterates rejection of offer as MAN begins buying shares(C)1994-2006 M2 COMMUNICATIONS LTD http://www.m2.com

The Swedish trucks and buses manufacturer Scania issued on Wednesday evening (11 October) a statement reiterating its rejection of German truck maker MAN AG's unsolicited offer.

Scania said that it has received market reports suggesting that "MAN has, in parallel to proposing friendly talks between the two companies, today entered the market as an aggressive buyer of high-voting A-shares in Scania".

Scania repeated that in its view MAN's offer substantially undervalues Scania, both regarding the earnings outlook and the synergy potentials in a combination of Scania and MAN.

Scania later on Tuesday evening also issued a brief statement saying that its operating income for the third quarter will exceed market expectations by almost 25%, due to higher deliveries and improved capacity utilisation.

The Swedish industrial holding company Investor AB, which holds over 19% of the votes in Scania, supported Scania's view in a comment.

"While there are industrial merits to a combination of the two companies, the initial bid did not at all reflect the long-term value and potential of Scania. We estimate potential synergies in a combination of Scania and MAN to be substantially higher than the EUR500m per year indicated by MAN, even when taking execution risks into consideration," Investor said.

"Our assessment is that the earnings prospects for Scania are significantly higher than the current market consensus for future years," Investor added.

MAN confirmed on Thursday morning (12 October) that it has instructed its brokers to acquire shares representing at least 5% of the votes in Scania through an off-market purchase. The purchase price for the shares is EUR51.29 per share, which is higher than MAN's original offer of EUR48 per share. Under the Swedish takeover regulations MAN must amend its offer to the new price.

MAN's original offer for Scania, published on 18 September, values Scania at EUR9.6bn. Following Scania's rejection of the offer MAN on 9 October said that it was willing to consider withdrawing its offer and to "seek a friendly solution through negotiation".

One British pound (GBP) is worth approximately 1.48 euros (EUR).

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