21 January 1999

AB Volvo said it has bought 12.85% of Scania AB, its rival Swedish truck and bus maker.

The acquisition could be the first step in a hostile takeover. Volvo said it had had discussions with Scania's main shareholder AB Investor about the possible merger of Scania and Volvo. Such merger would create Europe's largest and the world's second largest manufacturer of heavy trucks. The combined group would have strong brands, significant development resources and large volumes, particularly in diesel engines.

As Volvo targets the heavy duty vehicle market, rumors are about a possible sale of its car business. It has been reported that Volvo has been in talks with Italian car maker Fiat SpA and with US Ford Motor Co.