Monday, Nov 28, 2011

--IPIC and MAN reached a final agreement on FerroStaal

--MPC to acquire FerroStaal for about EUR160M

--MAN SE to pay EUR350M to buyback FerroStaal from IPIC

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   By Nico Schmidt and Neetha Mahadevan 
   Of DOW JONES NEWSWIRES

FRANKFURT (Dow Jones)--German truck maker MAN SE (MAN.XE) has removed a remaining obstacle to a full takeover by controlling shareholder Volkswagen AG (VOW.XE) in settling a long-running dispute with Abu Dhabi's International Petroleum Investment Co. over troubled industrial services firm FerroStaal AG.

MAN said Monday it had agreed to buy back IPIC's 70% stake in FerroStaal for EUR350 million before reselling the whole company to German capital investment and shipping company MPC Muenchmeyer Petersen & Co. GmbH (MPC.XE) for EUR160 million. IPIC paid EUR450 million for its FerroStaal stake in 2009.

"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 a statement. IPIC's managing director Khadem Al Qubaisi said the two sides have "finally put their differences aside."

A VW spokesman declined to comment. But the German auto-making giant, which has a 53.7% stake in MAN, has put initial yearly cost savings from the takeover of the truck maker at at least EUR200 million. Assuming the dispute over FerroStaal was resolved, VW has said cost savings could be worth significantly more particularly if MAN strengthened ties with Swedish truck-making group Scania, 62.6%-owned by VW.

Shares in MAN rose sharply Monday despite the loss the truck maker has taken on the FerroStaal sale. MAN shares were up 5.2% at 1202 GMT, at EUR58.90. VW's preferred stock was up 4.7% at EUR117.40.

The German truck maker paid less than investors had expected for IPIC's FerroStaal stake while the deal clears the way for MAN's full integration with VW which should lead to important cost savings, said Frank Biller, an analyst at LBBW. "A better price than feared has been negotiated and a full integration in Volkswagen is much easier now without legal uncertainties surrounding Ferrostaal," Biller said.

MAN's dispute with IPIC arose from an investigation into bribery at FerroStaal. IPIC refused to take over the remaining 30% from MAN as initially planned because the allegations dated back to when Ferrostaal was wholly-owned by the German company. MAN and IPIC disagreed over who should bear the costs of the investigation, possible charges, and shoring up finances at Ferrostaal whose reputation IPIC said was damaged by the bribery probe.

-Neetha Mahadevan, Dow Jones Newswires; 49-69-29725-500; neetha.mahadevan@dowjones.com

(END) Dow Jones Newswires

28-11-11 1236GMT