Shares in Volkswagen plunged on Monday, three days after it offered 6.7 billion euros ($10.2 billion Cdn) for the 37.4 per cent of Sweden’s Scania it doesn’t already own.
The offer, made late Friday, represents a 36 per cent premium on shares of the Swedish truck maker.
VW fell as much as 7.5 per cent to 185.90 euros and were down 6.8 per cent in Frankfurt on the deal, which will be partly financed by a capital increase.
VW, Europe’s largest automaker, has been attempting to create a global heavy trucks unit, by buying controlling stakes in Scania and German truckmaker MAN SE.
But its efforts have been stalled by minority investors who have resisted efforts to share technology.
Scania shareholders want better offer
At Scania, the remaining shareholders, including Swedish pension fund AP4 and Skandia Liv financial group, say they don’t believe the best offer is on the table.
VW is facing a lawsuit from minority shareholders of MAN, who are seeking a higher price in a separate takeover offer.
Demand for heavy trucks has diminished in Europe because of the debt crisis and slow economies.
But VW expects it to pick up as the Eurozone heads for recovery. If it is successful in combining MAN and Scania, it would control more than one third of the European market for heavy trucks, competing with Daimler and Volvo.
Volkswagen chair Martin Winterkorn defended the offer in the face of scepticism from both analysts and shareholders.
"This offer reflects the long-term strategic potential of fully integrating Scania within the Volkswagen Group," he added.
Earnings forecast disappoints
VW already makes commercial vehicles, such as delivery vans and the Amarok pickup and had hoped to achieve economies by merging parts of its operations with Scania. So far, the Swedish truck maker has resisted integration.
Traders were unhappy at VW’s earnings forecast, also released Friday.
VW said its 2014 operating margin could be within a range of 5.5-6.5 per cent, compared with 5.9 per cent last year. Analysts had hoped for 7.4 per cent.
"For a long while, VW's endless European market share gains, constant success with Audi, magical claims for the potential of MQB (modular platforms) and stated ambitions for global dominance combined to convince many that this was the World's Best Auto Stock," analysts at Bernstein Research said.
"But such optimism has faded - VW has now disappointed the market quite a few times. 2014 will represent the fourth year of flat earnings in a row," they added.