Bloomberg reported that Volkswagen plans to boost its holding in German truck maker MAN to as much as 40% to forge a truck alliance with Scania in Sweden that could save upwards of EUR 1 billion in annual costs.

Wolfsburg, Germany based Volkswagen increased its stake in the commercial vehicles maker to 30.47%, requiring Volkswagen to make a mandatory bid for the entire company.

Europe’s largest carmaker offered EUR 95 per common share, less than the May 6 closing price of EUR 96.52.

Volkswagen chairman Mr Ferdinand Piech is pushing MAN and Scania to reduce spending as he also pursues a merger with Porsche and seeks to surpass Toyota Motor Corp as the world’s biggest automaker by 2018. Volkswagen’s increased stake may allow the companies to get regulatory approval to share business information with one another and work more closely together.

Mr Hans Dieter Poetsch CEO said that VW, which before held 29.9%t of MAN’s voting rights, sees cost reductions of about EUE 1 billion for an integrated company fully sharing research and development activities.

He said “VW aims for an MAN holding of 35% to 40% to give it a stable majority at annual meetings and estimates reaching that level may cost as much as EUR 1.5 billion.”

The carmaker will be able to buy the shares it needs on the open market after making the mandatory bid if enough investors don’t tender their shares at the offer price.

(Sourced from Bloomberg)