LONDON (CNNfn) - Swedish truck maker Volvo on Friday refused to concede the failure of its planned $6.9 billion acquisition of domestic rival Scania amid a welter of reports that the purchase will be blocked by European regulators.|
The deal has been beset with squabbles since Volvo first announced plans to acquire its smaller rival in January last year. Volvo finally secured Swedish investment group Investor AB's agreement last August to sell its majority stake in Scania, allowing Volvo to create the world's second-largest truck maker.
A succession of published reports said the European Commission, the Brussels-based executive arm of the 15-nation European Union, would seek to block the bid next week, citing antitrust concerns in the Scandinavian and British markets.
"We are focusing on having discussions with the [regulators]," a Volvo official told CNNfn.com Friday, though he declined to comment on whether the group expected the deal to get the EU's green light.
Swedish media reports Friday said that both companies could become takeover targets if the deal is blocked. Mercedes, a unit of DaimlerChrysler (FDCX) and Volkswagen (FVOW) have been linked with Volvo while Iveco, a unit of Italy's Fiat, has eyed Scania in the past.
Unions cite existing concessions
Regulatory concerns have clouded the deal since its inception, though analysts applauded its commercial logic as it would enhance Volvo's ability to compete in the global truck market. The company withdrew from the passenger-car industry in 1998 with the sale of its car business to Ford (F: Research, Estimates).
The Commission opened a formal four-month review of the deal and is scheduled to make its final report on Mar. 23, though sources in Brussels report that an announcement could come on Mar. 14. Commission officials were unavailable for comment.
The Commission's merger control task force has blocked just 11 deals over the past decade. In November 1999 it quashed U.K. tour operator Airtours' planned purchase of its domestic rival First Choice.
Volvo and Scania together would represent the largest truck producer in Europe, with a market share of around 30 percent last year compared to second-placed Mercedes.
Union officials from Volvo and Scania complained to the Commission Friday about its treatment of the proposed deal, saying the companies had already made significant concessions to regulators. These include a pledge to cap their share of the western European heavy truck market to 30 percent and open up its domestic truck servicing market to rivals.
Union officials also cited the Commission's approval of the German bus manufacturer Kaessbohrer by Mercedes. This gave the DaimlerChrysler unit a 70 percent share of the German bus market, equivalent to the share that a combined Volvo-Scania would have in Scandinavia.
Volvo shares rose 3.4 percent to 214 Swedish crowns in morning trade Friday. Scania rose 1.4 percent to 280 crowns after shedding more than 6 percent Thursday when the new concerns about the deal first emerged.
-- from staff and wire reports