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STOCKHOLM/BERLIN (Reuters) - Scania's (>> Scania AB) minority shareholders should reject Volkswagen's (>> Volkswagen AG) 6.7 billion euro ($9.3 billion) bid, the Swedish truckmaker's independent directors said, underlining a rift between its German main owner and remaining Swedish investors.
The recommendation by the members of Scania's board with no direct links to VW is a setback for the German automaker as it seeks to revive its stalled eight-year effort to create Europe's biggest trucks group and take on market leaders Daimler (>> Daimler AG) and Volvo (>> AB Volvo).
Volkswagen appeared unmoved by the dissent, saying separately it remained confident the bid would succeed and that it would not complete it if it failed to get the 90 percent acceptance needed to secure a full takeover.
"The offer price of 200 SEK per Scania share will in our view allow Scania shareholders to realize the maximum value they can realistically expect from their investment," it said.
"We trust that investors will appreciate this unique opportunity," it said in a statement.
The committee's rejection is still 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 (>> Man SE) 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.
"It's key to preserve the uniqueness of Scania's characteristics," said Asa Thunman, the committee's chairwoman.
When VW made its offer last month, the carmaker said a 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 potential.
The committee said that timescale was "conservative".
NO RUSH
Two minority Scania shareholders - Alecta with 2.0 percent of capital and AMF with 0.8 percent - told Reuters they were still evaluating the bid and would not rush to any conclusion.
Sweden's small shareholders association, which has championed opposition to the perceived heavy-handed approach by VW over Scania, said it was working on a response and noted the committee had raised good arguments in making its case.
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, also highlighted the risk of job losses at Scania but acknowledged that spurning the bid could hurt the stock in the short term.
Scania shares were 5.5 percent lower at 185.1 crowns by 1128 GMT while VW was down 0.3 percent. Analysts at Swedish bank SEB said the likelihood of the bid failing had increased.
"Normally it is pretty tough landing a deal when the board doesn't recommend the bid," said Hampus Engellau at Handelsbanken Capital Markets, another Swedish bank.
"At the same time, this is a rather hefty bid in relation to where the share price stood (before the bid) and the considerations that indicate the bid is too low are based on what Scania's value in the long term."
Scania stock traded at 147.5 crowns before VW's bid.
VW's bid values Scania at around 13 times forecast earnings, while Volkswagen trades at 3.6 times according to Thomson Reuters data.
"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.
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 knitting together Scania, MAN and its own trucks business.
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.
Volkswagen is not the only company struggling to get a grip on a Swedish unit.
General Motors for years tried to turn around Swedish brand Saab, which eventually went bust in December 2011, while China's Zhejiang Geely Holding Group Co.
"This is exactly what happened with us and Saab," a former manager at GM-owned Opel, who declined to be named, told Reuters. "Although the ownership changed, they are acting like they are still completely independent," he said.
(Additional reporting by Johannes Hellstrom, Daniel Dickson and Helena Soderpalm in Stockholm, Edward Taylor and Arno Schutze in Frankfurt; Editing by Ralph Boulton and Alistair Scrutton)
By Niklas Pollard and Andreas Cremer
