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Volvo Talks Of Merger With Scania

January 15, 1999

STOCKHOLM, Sweden (AP) _ The Swedish auto and truck maker Volvo bought a 12.85 percent share in rival truck maker Scania and wants to discuss a merger of the companies.

A combination of Volvo and Scania would create Europe’s largest and the world’s second largest manufacturer of heavy trucks and buses.

But the main owner of Scania, Investor AB, believes the time is not right for a merger discussion and Volvo has no immediate plans to make a public offer for Scania shares.

The announcement today came amid speculation that Volvo is looking to sell or merge its automobile division with a larger car company in order to concentrate on its heavy vehicles business.

``Our analyses of different alternatives show that Scania is a very good alternative for Volvo,″ chief executive Leif Johansson said in a prepared statement.

A merger would create a manufacturer with strong brands, significant development resources and large volumes, Volvo said.

In addition, Volvo believes that Scania and Volvo are similar in terms of company culture and business values and ``these strengths would enhance the combined entity’s ability to compete globally and to create significant shareholder value,″ the company said.

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