VW/Scania (FT)

Bernd Pischetsrieder's resignation from Volkswagen on Tuesday is the latest spanner in the works for the potential three-way combination of Sweden's Scania, Germany's MAN and VW's heavy truck division. It was already looking messy. On the same day, Investor, the investment vehicle of Sweden's Wallenberg family, raised its stake in Scania, which is defending itself against a bid from MAN. With family trusts, the Wallenbergs now have a third of the voting rights - sufficient to block a merger.

This has strengthened their negotiating position in two ways. First, they can push for a much higher price for the voting shares - at least the SKr519 they paid for shares on Tuesday, rather than the originally mooted SKr475. This starts to make a deal look expensive for MAN. Second, the Wallenbergs now have more clout to argue for other concessions, bearing in mind their belief in Scania's superior management, margins and growth prospects.

Both these factors may also increase the likelihood that no deal will be done, particularly since the man who has been pushing for one will disappear from the scene at the end of the year. VW's new management may still pursue a transaction. After all, its chairman, Ferdinand Piëch, was chief executive when the company took its original stake in Scania. But he has a lot on his plate. As well as overseeing a company that has just jettisoned its chief executive in the midst of a restructuring without offering an explanation, he also sits on the supervisory board of Porsche, which just said it may increase its stake in VW to 30 per cent.

A three-way Scania-MAN-VW combination, perhaps allowing the Wallenbergs a role, may not be imminent but it still seems feasible, with a softer approach by MAN. The greater risk - greater than no deal at all - is a fudged deal that would fail to deliver real consolidation.

Copyright The Financial Times Limited 2006