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Volvo leaps, Scania skids
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February 11, 1999: 10:23 a.m. ET
Scania shares fall 11% after largest shareholder says company isn't seeking buyer
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LONDON (CNNfn) - Shares of Swedish heavy truck and bus maker Scania fell 11 percent Thursday after its biggest shareholder dampened speculation about an imminent takeover.
Swedish investment group Investor, which owns a 45 percent stake in Scania, said the time is not right to sell the company, one of the world's largest in its sector.
But Investor's chairman, Percy Barnevik did say that long-term, Scania needed to reach some type of "arrangement" with another vehicle producer and that a reasonable price for Scania shares would be 250 Swedish crowns ($31.70), a 14 percent premium above where the shares were trading Thursday.
The comment was a veiled reference to Volvo, which early last month snapped up a 12.8 percent stake in Scania, and said it will seek a merger of the two firms to create Europe's largest manufacturer of buses and heavy trucks.
Volvo moved closer to those plans when it announced on Jan. 28 it was selling its auto operations to Ford Motor Co. for $6.45 billion. Volvo said the spin-off of the car unit would allow it to concentrate on other businesses, but especially its trucks.
Despite Investor's reported comments, Volvo spokesman Stefan Lorentzson said Thursday that high-level talks were continuing between top executives at both companies.
Lorentzson said the companies remain divided over price and a "common view" about how a combined entity would work.
Volvo ranks among the world's top three heavy truck makers, behind Germany's DaimlerChrysler and U.S.-based PACCAR.
In a statement Thursday that accompanied its 1998 earnings, Volvo said it would be able to use the proceeds from the sale of its auto arm "to continue to build on already strong positions in the field of financial products."
In 1998, Volvo reported a 12 percent dip in net income, excluding financial items, to 11.62 billion crowns ($1.476 billion) from 13.18 billion crowns ($1.674 billion) the year before. Sales rose 13 percent to 212.94 billion crowns from 183.63 billion.
Car sales over the period climbed 8 percent, as compared with a 17 percent increase for its other businesses.
Shares of Volvo rose 5 percent, or 10.5 crowns, to 222 crowns in Stockholm Thursday, while Scania stock slid 27 crowns to 218.5.
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