VW raises capital
June 4, 2014
Volkswagen (VW) had issued 10.47 million new preference shares at a price of 191 euros ($260) per share, Germany's biggest carmaker announced Wednesday.
The non-voting shares were sold by a consortium of major German and US banks and offered about 2.4 percent cheaper than VW's share price at the closing bell on Tuesday.
The net proceeds from the offering were intended to be used for enhancing VW's capitalization as well as to strengthen its financial flexibility, the carmaker said in a statement.
According to industry sources, about 2 billion euros from the proceeds are earmarked for funding the purchase of Swedish truck maker Scania.
In May, VW took full control of Scania following a deal worth an estimated 6.7 billion euros. The German company, which had already held a majority in the truck maker, needed to offer a huge premium to Scania shareholders, paying 200 kronor (21.9 euros), or about 50 percent more than the company's average share price.
VW fully acquired Scania to breathe new life into its underperforming trucks' alliance with Munich-based MAN. VW shareholders recoiled, however, at the prospect of partly financing the deal with a hike in capital. They criticized that management didn't tap VW's huge cash pool of more than 17 billion euros, resorting instead to issuing preference shares and new hybrid capital.
In early trading Wednesday, VW shares slipped 1.5 percent to about 192 euros, making the stock the biggest loser at the Frankfurt Stock Exchange.
uhe (Reuters, dpa)