Volkswagen set to gain full control over Germany's MAN

MUNICH, June 6 Thu Jun 6, 2013 3:14am EDT

MUNICH, June 6 (Reuters) - Volkswagen AG is set to gain full strategic and financial control over truckmaker MAN SE when it wields its 75 percent stake to approve a vote at MAN's annual shareholders' meeting on Thursday.

Volkswagen has tabled a motion to "dominate" MAN and pool both companies' cashflows, as Europe's biggest carmaker eyes savings by integrating MAN more closely with its other truck brand, Scania of Sweden.

While the vote's outcome is a foregone conclusion, shareholders are expected to criticise a VW-instigated management reshuffle that sidelined MAN's chief executive and eventually led to the February departure of its chief financial officer.

MAN investors have in recent years been critical of the domineering approach taken by Volkswagen and its Chairman Ferdinand Piech, the softly spoken but powerful patriarch who runs both companies' supervisory boards.

During a profit and loss transfer agreement, known more generally as a domination agreement in Germany, minority shareholders are given a chance to sell their stock or accept annual cash compensation for the loss of future dividend payments.

Volkswagen is offering 80.89 euros per share for those who want to exit, otherwise they will receive 3.07 euros per share each year.

Few are likely to tender, however, since the shares are changing hands at nearly 84.50 euros. This suggests investors are speculating the company will ultimately sweeten its offer if they hold out for a better deal.

Shareholders will also have the chance to press Piech and his management team around CEO Georg Pachta-Reyhofen about Tuesday's warning, in which MAN said profit margins will be significantly lower this year due chiefly to problems at its Diesel & Turbo division.

According to MAN, the warning will not affect VW's offer to shareholders.

MAN shareholders are also set to vote on management's proposal to pay a 1 euros per share dividend for the past business year. (Reporting by Irene Preisinger; Writing by Christiaan Hetzner; Editing by David Holmes)

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