VW faces rising opposition to Scania bid as Alecta rejects offer

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STOCKHOLM (Bloomberg) -- Volkswagen Group faces increasing opposition to its 6.7 billion euro ($9.3 billion) bid for the rest of truckmaker Scania after the third-biggest shareholder rejected the offer.

Alecta, which held 2.04 percent of Scania's stock at the end of March, said today in a statement that it would not support VW's bid of 200 kronor (22 euros) a share for the company because the price is too low.

Alecta joins AMF, Skandia and AP4 in rejecting the bid.

Swedbank Robur, which controls 1.87 percent of Scania's shares and is the fourth-largest shareholder, has so far not publicly indicated its intentions. A Swedbank Robur rejection would lift major owners against the deal to about 6.3 percent.

VW already controls 62.6 percent of Scania's capital via direct and indirect holdings. It is bidding for the rest of the company to push forward cooperation between the Swedish truckmaker and MAN, which VW also controls.

The German company, which said earlier this month it won't raise the offer, only plans to pursue the bid if shareholder acceptance reaches 90 percent, the threshold needed under Swedish law to force remaining owners to sell their holdings and delist the company.

VW's offer is 36 percent more than Scania's closing price on Feb. 21, the day VW announced the bid. The offer expires on April 25.

"Achieving the 90 percent acceptance threshold for VW is not a given," Alexander Whight, a JPMorgan Chase & Co. analyst, said in a note to clients published on Tuesday. About 8 percent of Scania's shareholders "have stated either they will not accept, or are not likely to accept due to their nature."

Scania dropped as much as 6.7 percent to 170.8 kronor, the steepest intraday decline since October 2011 and lowest level since the day VW announced its offer, and traded 4.6 percent lower as of 9:38 CET in Stockholm.

Scania’s long-term value

Alecta, a Swedish pension provider, said its decision was based on its own analysis and the conclusion by an independent committee of Scania's board last month that the bid doesn't fully reflect the company's fundamental long-term value, according to a statement on its Web site.

Investor AB, the Wallenberg family's publicly traded holding company which owns 0.4 percent of the shares, has rejected the offer as well, according to Sweden’s Svenska Dagbladet newspaper. The Scania Resultatbonusstiftelse, which holds 0.59 percent of the stock, also does not back the bid, according to another Swedish newspaper, Dagens Industri.

As VW has stated that the bid is final, any increased offer for Scania "would come with reputational risk and potentially lawsuits -- both of which we believe VW would wish to avoid," Whight said.

Not all shareholders have a negative view. Nordea Fonder said in February that it intends to accept the offer. AP1 and Lannebo Fonder have sold their respective stakes of 0.3 percent and 0.4 percent, Dagens Industri reported April 8. Didner & Gerge, which holds 0.63 percent of the stock, said on Tuesday it will accept the bid. SEB Fonder and Handelsbanken Fonder have also decided to accept, according to Dagens Industri.

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