By Anthony Shevlin 
 

Volkswagen AG's (VOW.XE) truck and bus unit said Tuesday that it has terminated the domination and profit-transfer agreement with its truck brand MAN SE (MAN.XE) to avoid higher payouts to outside shareholders.

The unit exercised an extraordinary termination right after a German regional court in June set the cash compensation in the agreement at a higher rate than previously laid out. The court said minority shareholders turning in their shares should receive 90.29 euros ($103.29) per share, compared with the EUR80.89 Volkswagen had offered, and raised the gross annual per-share payout to EUR5.47 from EUR3.07.

The domination and profit transfer agreement between Volkswagen Truck & Bus and MAN was agreed in 2013, about two years after Volkswagen made an offer to take over MAN.

"The total annual compensation to be paid to the outside shareholders is now no longer proportionate to the profit transfer of MAN SE and other benefits from the domination and profit transfer agreement," Volkswagen said.

The company said remaining MAN shareholders can tender their shares for EUR90.29 within a two month period, effective Jan. 1, 2019.

In June, Volkswagen Truck & Bus said it would rename itself Traton Group to become more independent and prepare for a potential listing. The official name change is expected to take effect by the third quarter.

Write to Anthony Shevlin at anthony.shevlin@dowjones.com

(END) Dow Jones Newswires

August 21, 2018 11:02 ET (15:02 GMT)

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