Peers circle Volkswagen’s large engines unit: sources

Arno Schuetze and Georgina Prodhan

Reuters

9th February 2016

Volkswagen ( ) has received expressions of interest for a unit making engines used in ships or small power stations, as rivals sense an opportunity to get their hands on the asset as a result of the car maker’s emissions scandal, several sources familiar with the matter said. Peers from China, Europe and the United States have recently told Volkswagen they would like to buy the operations of MAN ( ) that are not central to its trucks business, they said, adding that the unit may be valued at up to billion euros ($4. $5.

6 billion). Volkswagen has so far stuck to its line that the business, which made an operating profit of 206 million euros on sales of 3. 3 billion euros in 2014, is not for sale.

A Volkswagen spokeswoman described the reported interest as unfounded ”speculation”. Europe’s biggest carmaker is struggling to cope with the fallout from the scandal, and last week postponed the publication of its 2015 results, saying it was unable to calculate the cost for fines, lawsuits and vehicle refits after cheating emissions tests. Separately, the trucks unit said earlier this week that it was keeping all options open with regard to expanding overseas, including a stock market listing.

Volkswagen secured a 20 bridging loan in January to keep above water until it can refinance itself in the bond market as it used to before the scandal broke. It has stressed that no fire sales are necessary and that no specific assets have been discussed with respect to a potential divestment. But two people familiar with the matter said it was clear that if Volkswagen did have to sell something to meet the costs of the scandal, MAN diesel would be the first thing it would look at.

Another person said that Volkswagen continued to get expressions of interest for the unit and was expected to engage soon in a round of exploratory talks with a potential Chinese suitor. ”There has been a formal exchange. Talks are in preparation.

But it’s all very early stage,” the person said, adding that Volkswagen has not allowed any peer to do a due diligence assessment of the asset. Large Chinese peers include Yuchai ( ) Weichai ( ) and Sinomach ( ). Chinese companies have been on a acquisition spree in Germany recently, buying up industrials groups in recent weeks as they try to broaden their international footprint.

General Electric ( ) Siemens ( ) and Sulzer ( ) are also being named by investment bankers as potential suitors. However, they would likely only show interest in parts of the business, one of the sources said. ”Everyone is expecting it to come out — the question is when,” another banker familiar with the car industry said.

(Additional reporting by Freya Berry, Pamela Barbaglia and Andreas Cremer; Editing by Ludwig Burger and Adrian Croft) BRUSSELS French carmaker PSA Group secured unconditional EU antitrust approval on Wednesday to acquire General Motors’ German unit Opel, a move which will help it better compete with market leader Volkswagen . SAO PAULO Oaktree Capital Management LP has entered the race to buy control of Renova Energia SA with a proposal that would inject fresh capital and help refinance part of the Brazilian renewable energy firm’s debt maturing this year, two people with direct knowledge of the plan said on Wednesday. The people said Oaktree would pay 170 million reais ($51 million) for Light SA’s 16 percent stake in Renova and spend another 1.

2 billion reais to dilute Renova’s cont .
 

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