Scania Shocker: Shareholders May Accept Porsche Offer?

The story of little car company that took over the world unfolds! To think, Porsche once worried about the possibility of a takeover by a larger company. Here's another one to file in the "strange but true" category! The situation is messy and complicated when trying to buy up a huge automaker, as Porsche is becoming well aware.

With Porsche continuing it's buying binge of Volkswagen, it has been steadily upping it's stake over the past year to the point where on January 5th it became the owner of 50.9 percent of the company.

Now, VW holds a controlling interest in Swedish truck manufacturer Scania (Saab Scania, anyone?). With Porsche clearing the 50% ownership hurdle, under Swedish law this automatically triggers a mandatory takeover offer.

In accordance with Swedish law, Porsche submitted it's mandatory "token" offer for Scania in the lowest possible amount, with the intent it was to be turned down.

The minimum bid according to Swedish law is the volume weighted average share price in the 20 days before Porsche controlled VW. Porsche has no desire in owning the truck manufacturer, and has stated as such.

So, getting to the point, in the time since the offer was made Scania has reported a 50% drop in 4th quarter results, and it's shares are now trading below the level offered by Porsche in it's mandatory offer.

The decision on the offer is to be made by Scania's shareholders. Scania's management has issued a press release urging them to turn down the offer. That release can be found on Scania's website.

The car business is one of complicated interrelationships. There's been a lot of drama and obstacles in the way for Porsche in purchasing VW. I wonder why they want it so bad? 

Their intent is to raise their stake in VW to 75% by this year. I guess it could turn out to be a boon for Porsche if they can quickly institute their operational expertise at the automaker. Still, it's pretty funny to see such a small company buying out one of the word's largest.

This Scania deal is turning out to be a funny side drama in the whole purchase. The offer stands at 2.7 billion euros, which while being comparatively a low price, is no small sum.

We'll see whether or not Scania's shareholders decide to throw themselves on the sports car brand. Look out Porsche, you may be biting off more then you can chew!