MAN Settles IPIC Ferrostaal dispute
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Tue November 29, 2011 9:40 am
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INTERNATIONAL. MAN SE, the truckmaker controlled by Volkswagen AG, ended a dispute with International Petroleum Investment Co. by buying back former unit Ferrostaal, smoothing VW’s moves to create Europe’s biggest commercial-vehicle tie-up.

MAN will pay Abu Dhabi’s IPIC 350 million euros (US$465 million) to buy back a 70% stake in Ferrostaal and resolve all claims, the Munich-based company said today in a statement. MAN will then sell all of Ferrostaal to Muenchmeyer Petersen & Co. GmbH for as much as 160 million euros.

Ferrostaal, which manages the development of industrial and petrochemical plants, has been under investigation by German prosecutors since 2009 over allegations that it paid bribes to win contracts. VW previously said unresolved investigations at Ferrostaal were holding up efforts to integrate MAN with Swedish rival Scania AB, which Europe’s biggest carmaker also controls.

“VW has always sought to minimize potential risks and this settlement is removing outstanding legal qualms,” said Frank Biller, an analyst with Landesbank Baden-Wuerttemberg in Stuttgart, Germany, who recommends buying MAN stock. VW doesn’t face any more obstacles regarding joint projects with MAN and Scania, he said.

“We are pleased to have been able to end the talks with IPIC on a conciliatory note with an outcome that is acceptable to everyone,” MAN Chief Financial Officer Frank Lutz said in the statement. “We have set the course for Ferrostaal to make a successful new start.”

Volkswagen spokesman Marco Dalan declined to comment. His counterpart at MAN, Stefan Straub, said the agreement with IPIC has no bearing on VW’s plans to bring about closer cooperation between MAN and Scania. The deal won’t affect fourth-quarter results at MAN, which made “sufficient” provisions to cover any risks, according to Straub.

“The takeover through MPC will mark a new era for Ferrostaal,” Axel Schroeder, co-owner of Muenchmeyer Petersen & Co. said today at a press conference in Hamburg, Germany where the trading company is based.

Ferrostaal, based in Essen, Germany, found in an internal probe in May that it paid 8.8 million euros in bribes to win business, and another 81 million euros was unaccounted for. A former member of Ferrostaal’s management board and a former manager were charged by Munich prosecutors in April with paying bribes of more than 62 million euros from 2000 through 2007 to win submarine orders from Greece and Portugal.

MAN sold a 70 percent stake in Ferrostaal, which also builds factories, to IPIC, the investment company owned by the Abu Dhabi government, for 450 million euros. MAN completed the transaction, designed to allow the truckmaker to focus on commercial vehicles, diesel engines and turbomachinery, in March 2009.

 

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