* Members without ties to VW recommend shareholders reject
* Say does not reflect full value of Scania
* VW offered 200 SEK per share; Scania ended Monday at 195.9
* Recommendation a setback for VW's global truck ambitions
* Scania shares fall 4.3 pct, VW down 0.1 pct
(Repeats to add link to Breakingviews)
By Niklas Pollard
STOCKHOLM, March 18 Scania's minority
shareholders should reject Volkswagen's 6.7 billion euro ($9.3
billion) bid, the Swedish truckmaker's independent directors
said, underlining a deep rift within the company.
The recommendation by the members of Scania's board with no
direct links to VW is a setback for the German
automaker, which is trying to forge a closer-knit trucks group
capable of taking on market leaders Daimler and Volvo
The committee's rejection is likely to fuel opposition to
the bid, which has met with a mixed and mostly non-committal
response from minority owners, primarily Swedish pension funds
and other financial institutions.
Volkswagen, which with subsidiary MAN has 62.6
percent of the capital and 89.2 percent of votes in Scania, last
month offered to buy out minority shareholders for 200 crowns
($31.5) per share, in an attempt to draw a line under years of
tense relations with them.
The independent committee said on Tuesday that VW's offer
was too low and did not reflect Scania's long-term prospects,
its growth outlook, technological excellence and the potential
for savings within a merged group.
"Scania is a world leader in its industry and the Committee
has strong faith in the business plan set out by the company,"
said Asa Thunman, the committee's chairwoman.
When VW made its offer last month, the carmaker said a full
tie-up with Scania should generate savings of at least 650
million euros per year from joint development and other steps
and that it may take at least 10 years to achieve the full
The committee said that timescale was "conservative."
Scania's flexible production system and strong profitability
has for years been the envy of the European truck industry.
The company expects the benefits from heavy investments in
its truck models and growing sales of high-margin service
contracts to bolster profitability further in the coming years
while aiming for a target of doubling output by 2020.
The committee, which includes a member of Sweden's
Wallenberg business family and union representatives,
acknowledged that spurning the bid could hurt for the stock in
the short term.
Scania shares were 4.3 percent lower at 187.5 crowns by 1035
GMT while VW was down 0.1 percent.
"In short, we believe this slightly increases both the risk
for a bid failure and the likelihood for a slight increase of
the bid offer," analysts at Swedish bank SEB said in a note to
The board members also highlighted the risk of job losses
at Scania, based in Sodertalje south of Stockholm, pointing to
job protection deals struck between MAN and German labour
unions. Swedish unions have struck no such deals with Scania.
VW was not immediately available for comment.
"You can always chose assumptions that will back your point
of view. But from a VW shareholder point of view I have to say
that Volkswagen's Scania bid is more then generous," said
Juergen Meyer fund manager at SEB Asset Management.
VW's bid values Scania at around 13 times forecast
earnings, while Volkswagen trades at 3.6 times according to
Thomson Reuters data.
Still, rejecting the offer carries risks as Volkswagen's
solid majority of votes enables it to ignore the demands of
minority shareholders in pursuit of its stalled eight-year
effort to create Europe's largest trucks group.
The committee and company management also painted a modestly
rosy picture of the truckmaker's performance in the near term,
saying Scania truck orders for the first two months of 2014 were
in line with the same period last year and up compared to the
fourth quarter of 2013.
($1 = 0.7180 Euros)
($1 = 6.3511 Swedish Crowns)
(Additional reporting by Johannes Hellstrom and Helena
Soderpalm in Stockholm; Edward Taylor in Frankfurt; Editing by
John Stonestreet and Alistair Scrutton)