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26 January 2007 - An alliance between Scania and MAN could involve a "co-operation agreement" that would allow the truckmakers to join forces without actually merging, according to Leif Östling, Scania's chief executive.
The Swedish company this week saw off a €10.3bn ($13.4bn) hostile takeover bid by Germany's MAN, although both companies have said they remain open to an alliance that has "industrial merit".
Discussions have recently focused on a full merger or the creation of a new company into which assets from MAN and Scania would be injected. Mr Östling said yesterday that a softer partnership was another option. "You do not necessarily need ownership [for an alliance]. It can be done with a co-operation agreement," he said.
This agreement could involve working together in areas such as research and development, as well as engine component production, he said.
MAN and Scania signed such an agreement in 2003, but it fell apart after what Mr Östling described as "differences of opinion". He added that a new agreement was "up for negotiation".
However, he added that consolidation in the truck industry meant that a deeper alliance also made sense in the longer term.
The companies involved already share an equity relationship. MAN controls 15 per cent of the votes in Scania, while the German truckmaker is itself 20 per cent owned by Volkswagen, which in turn owns a controlling 34 per cent stake in Scania.
Mr Östling's proposal is likely to be greeted with scepticism in Germany on the basis that VW has large and illiquid stakes in two truckmakers as well as its own truck assets.
VW has said it wants a friendly merger between the two companies and people familiar with its thinking say its end-goal is a large stake in a combined truck group.
People close to the situation said Mr Östling's comments reflected Scania's belief that it does not necessarily need a merger partner.
Its position was enhanced yesterday after it reported strong results for 2006, with pre-tax profit up 19 per cent at SKr2.58bn ($368.6m), and outlined a rosy future as a stand-alone company.
It said demand for heavy trucks would stay "strong" in Europe throughout 2007 and that production would be raised to 80 000 vehicles a year from the end of the first quarter of this year, up 25 per cent from last year.
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