UPDATE 3-MAN, IPIC end Ferrostaal wrangling with sale deal

Mon Nov 28, 2011 7:15am EST

* MAN to buy back 70 pct of Ferrostaal for 350 mln euros

* MPC to then buy 100 pct of Ferrostaal for up to 160 mln euros

* German truckmaker won't see hit to earnings from deal

* MAN shares up 5.1 pct, outperforms rivals (Adds comments from analyst, companies, updates shares)

By Christiaan Hetzner and Victoria Bryan

FRANKFURT, Nov 28 (Reuters) - German truckmaker MAN agreed to sell its Ferrostaal unit in a deal that ends a year-long dispute, prevents further related losses and removes the last remaining legal risks for shareholders from a bribery scandal that rocked the group.

Abu Dhabi's International Petroleum Investment Company (IPIC) will sell back its 70 percent stake in Ferrostaal to MAN, which then will sell the unit in its entirety to the MPC Group based in Hamburg, the German industrial company said on Monday.

"This settlement is the outcome of very good cooperation between both shareholders, and enables IPIC and MAN to finally put their differences aside," said IPIC's managing director, Khadem Al Qubaisi, in a statement published by MAN.

MAN sold 70 percent of Ferrostaal to IPIC in March 2009, exercising a put option for the remaining 30 percent at the beginning of 2010 in a deal that had valued the entire unit at around 700 million euros ($929 million).

An ensuing scandal over bribery payments made by a large number of MAN's former businesses including Ferrostaal and the legal fines that resulted prompted IPIC to renege on the deal entirely, triggering a bitter dispute that has raged ever since over who should fund the company's operations.

MAN said in a statement it would pay 350 million euros to buy back the Ferrostaal shares from IPIC, only to then immediately unload the subsidiary onto MPC for a price of up to 160 million euros with closing expected in the first quarter.

A spokesman for MAN said the sale would be reflected in the accounts for the current fourth quarter, but would not lead to any earnings hit: "Provisions already booked this year were sufficient to cover the risks."

Ferrostaal, a plant construction and engineering business, had in October agreed to a 149 million fine linked to the bribery charges.

MARKET EYES VOLKSWAGEN

"Ferrostaal still has to pay the fine to the prosecutor's office, but that is a matter for the owner MPC, and is no longer relevant for us," the MAN spokesman said.

Shares in MAN, a maker of trucks and large diesel engines, traded 5.1 percent higher as of 1212 GMT, outperforming peers Scania and Volvo, which rose 4.1 pct and 3.8 percent respectively.

"(The deal) may revive speculation that Volkswagen may increase (its) MAN stake," said a Frankfurt-based trader, who declined to be named.

Metzler Bank's Juergen Pieper said investors were happy to see the issue resolved once and for all, but saw little reason at present for Volkswagen to scoop up more MAN shares since the carmaker already has already begun forging its truck empire.

"They already have the majority in MAN, so there's no time pressure. Volkswagen currently has more pressing problems with the Porsche and Suzuki," he said.

Volkswagen offered MAN investors 95 euros per share as part of a mandatory tender bid that saw their voting stake rise to 55.9 percent at a cost of over 3.4 billion euros.

The German carmaker might be more inclined to acquire further shares in MAN as long as the stock is trading at a significant discount to the tendered offer price. The next disclosure threshold is 75 percent.

The Ferrostaal deal won't have any impact on VW's plans to extract synergies from a partnership between its two truck businesses, Scania and MAN, since all three sides have been in negotiations ever since Volkswagen received the MAN shares on Nov. 9. ($1=0.754 euros) (Editing by Mike Nesbit)