VW Rejects Daimler Speculation It’s Interested in Paccar Bid

Jul 03, 2014 5:20 am ET

(Updates with analyst comments starting in fourth paragraph.)

July 3 (Bloomberg) -- Volkswagen AG isn’t interested in bidding for U.S. truckmaker Paccar Inc., rejecting comments made by Daimler AG’s commercial-vehicle chief Wolfgang Bernhard.

The response is a “clear denial,” Christine Ritz, a spokeswoman for Wolfsburg, Germany-based Volkswagen, said today by phone. When asked about consolidation among truck manufacturers at an event yesterday in Berlin, Bernhard said VW’s interest in Paccar was a widely discussed topic in the industry, according to Florian Martens, a spokesman for Stuttgart, Germany-based Daimler.

Volkswagen, Europe’s biggest carmaker, sold 2 billion euros ($2.7 billion) in preferred stock a month ago to help fund the takeover of truck producer Scania AB. VW is integrating the Swedish manufacturer with its own commercial-vehicle operations and Munich-based MAN SE, which VW also controls, to create a truck division to compete with Daimler, the industry leader.

A VW bid for Paccar “would not be a ridiculous move, given the company’s truck operations currently are all non-NAFTA,” Max Warburton, an analyst at Sanford C. Bernstein, said today in a report. “But a deal would be expensive, require a capital raise and may upset investors.”

Shares Fall

VW fell as much as 1.4 percent to 190.20 euros and was trading down 0.9 percent at 11:18 a.m. in Frankfurt. The stock has fallen 6.4 percent this year valuing the company at 90.9 billion euros.

The German automaker has thus far reaped limited financial rewards for the billions of euros invested in purchasing majority stakes in Scania and MAN as minority investors resisted efforts to share technology that would boost combined profit. VW has achieved only 200 million euros in savings from joint work among its commercial-vehicle operations. Its goal is to deepen cooperation among the businesses to reach annual operating- profit synergies of 650 million euros.

With Scania and MAN focused on Europe, VW lacks a presence in the North American truck market. Bellevue, Washington-based Paccar makes Kenworth and Peterbilt trucks in the U.S., as well as DAF vehicles in Europe, and has a market value of $22.6 billion.

DAF controls about 16 percent of the western European medium- and heavy-duty truck segment, while MAN and Scania have a combined market share of almost 27 percent, according to industry data from Daimler. Any combination of VW with DAF may raise antitrust concerns.

Potential Suitor

“Given competition legislation, it is unlikely that VW would be able to hold on to Paccar’s European operations,” Arndt Ellinghorst, an analyst at ISI Group in London, said in a report. CNH Industrial NV, the maker of Iveco trucks, is “viewed as a potential suitor” for DAF, which may cost about $2.5 billion to buy.

Bernhard was an executive at Volkswagen before being pushed aside in 2007 after Chief Executive Officer Martin Winterkorn took charge. Andreas Renschler, who was head of Daimler’s trucks unit prior to Bernhard, will oversee VW’s commercial-vehicle operations starting next year after deciding to leave Daimler following a job switch with Bernhard.