UPDATE 1-Swedish market body says VW can up Scania stake

Fri Sep 28, 2007 7:36am EDT

(Adds council comment, background, more detail)

STOCKHOLM, Sept 28 (Reuters) - Sweden's securities council said on Friday it has given German auto giant Volkswagen (VOWG.DE) permission to raise its stake in truck maker Scania (SCVb.ST) without needing to make a bid for the whole firm.

The council said a law firm had submitted a request on behalf of Volkswagen, the biggest owner of both Scania and German rival MAN (MANG.DE), to be allowed to buy more shares in the Swedish truck maker without triggering a compulsory bid.

Volkswagen, which owns 36.4 percent of Scania's voting rights and 20 percent of its capital, already has permission to own as much as 49.99 percent of the voting rights without making a bid, the council added in a statement.

"They asked us to give a dispensation for going over (the 49.99 percent level) and since there would be no shift in control there was no reason not to give it," Rolf Skog at the council told Reuters.

Volkswagen (VOWG.DE) has been keen to restart talks on a merger of Scania and MAN to create Europe's truck market leader after MAN withdrew a hostile takeover bid early this year.

But in recent months all involved have remained mum on the issue, saying tempers must be allowed to cool before talks on a friendly tie-up can begin. MAN's hostile bid was fiercely resisted by Scania management and its second biggest owner, investment firm Investor AB (INVEb.ST).

The council said the new dispensation covered an increase in Volkswagen's holding "without limits".

((Reporting by Niklas Pollard and Simon Johnson; editing by Greg Mahlich; +46 8 700 1110, Reuters Messaging: niklas.pollard.reuters.com@reuters.net, e-mail: niklas.pollard@reuters.com)) Keywords: SCANIA VW/

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