Samuelsson had to go for VW's dream to come true

FRANKFURT (Reuters) - For 1 billion euros any manager is expendable -- even the high-profile chief executive of German truckmaker MAN, Hakan Samuelsson.

Monday's exit by Samuelsson meant talks can resume with Swedish Scania over a three-way truck alliance under the banner of common shareholder Volkswagen that could reap that amount in synergies.

VW Chairman Ferdinand Piech, who also chairs the board of MAN, made little secret of his desire to add two new trophies to Volkswagen's stable of 10 brands as the German group attempts to supplant Toyota as the world's largest carmaker.

MAN was the most obvious candidate, a 250-year-old conglomerate that cast off the tight confines of its historical legacies to restructure aggressively and streamline a sprawling portfolio of businesses around its core truck operations.

Until Monday, Samuelsson was a big roadblock to the project.

Piech had fired a warning shot through the media, telling journalists at the Frankfurt auto show in September the 50 percent plunge in global heavy truck markets meant that time was of the essence. Usually when things don't change fast enough for Piech, CEOs start getting the heave-ho.

"It is in our view highly likely that Piech has used the opportunity to get rid of Samuelsson in order to pave the way for a new attempt to integrate MAN and Scania -- maybe under the roof of VW," Equinet analyst Tim Schuldt told clients in a note.

"We believe the resignation of the CEO does increase the probability of a takeover by VW, as Samuelsson had in the past emphasized the necessity for MAN to stay independent," he wrote.

Samuelsson's resignation frees a path for VW's powerful chairman to push forward with plans to save on duplicated costs for developing trucks and diesel engines, savings he once said could be close to 1 billion euros ($1.51 billion).

Shares in MAN already reflect a certain amount of bid speculation, so they are not cheap. According to Thomson Reuters Starmine, they trade at 11.1 times forward 12 month EV/EBITDA, a premium to the multiples of global truck market leaders Daimler

and Volvo.

Acquiring the remaining 70.1 percent in MAN would cost VW around 6 billion euros at current prices and even without a control premium.

With a deal to merge with Porsche pending, Piech might then choose to first extract as many savings between the three rivals before launching a full bid, especially as the price he could get for MAN's non-truck Power Engineering division would be low in current markets.

Now that Samuelsson is gone, Scania CEO Leif Ostling, who long opposed a tie-up with MAN, will surely rethink the wisdom of any further delays.

"It's no secret that Samuelsson was not the driving force behind the truck alliance," said a labor source close to the matter who asked not to be named.

Ironically it was MAN's Swedish CEO who broke the ice on consolidation with Scania in 2006, launching an unsolicited offer for his long-time employer that went hostile and eventually failed.

"Together with (former VW CEO Bernd) Pischetsrieder at the time, Samuelsson tried behind Piech's back to call a deal in which VW would sell their shares in Scania to MAN and basically put VW for good out of the truck business," said a London-based analyst who covers the truck industry.

But this drove Scania into the arms of VW, which also bought a near-30 percent in MAN.

"Once Samuelsson was no longer in charge any more of the entire consolidation of trucks, he really lost interest. He stopped being proactive," the analyst said.

After MAN dropped its bid in January 2007, the Swede turned his attention to other parts of the business.

He acquired Volkswagen's Brazilian heavy truck unit for an enterprise value of 1.18 billion euros, took a 25 percent stake in China's largest truckmaker, Sinotruk, and mapped out a merger of MAN's two other divisions, Diesel and Turbo.

In the process, MAN grew to become the world's third-largest heavy truck maker behind Daimler and Volvo.

"He did good stuff for MAN but I think the days where he could be of real added value were over. This is no longer a company that needs a lot of restructuring," the truck industry analyst said.

Even German unions long opposed to breaking up MAN are starting to prepare themselves for a hive-off of Power Engineering. The result of MAN's merger of its Diesel and Turbo business might now be large enough to survive on its own with close to 4 billion euros in annual sales.

"If the shareholders want a takeover then labor cannot prevent it at the end of the day. Our task will then be to clarify under what conditions will it come to that and what of MAN will be left over," the labor source explained.

"We believe that the truck alliance is now more probable since (Monday) and will likely gain momentum."

(Editing by Sitaraman Shankar)