x Abu Dhabi, UAEWednesday 17 January 2018

Abu Dhabi's Ipic proposes settlement in dispute over Ferrostaal

IPIC has made an offer to settle a legal dispute with MAN, the German truck-maker from which it bought 70 per cent of Ferrostaal in 2009.

The International Petroleum Investment Company has made a proposal to settle a dispute with the German truck maker MAN over the sale of Ferrostaal, a former industrial services subsidiary of MAN.

Ipic, as the Abu Dhabi investment fund is known, did not reveal details of the offer, which followed a proposal from MAN that was withdrawn this month. Ipic said in a statement its offer was fair but that a resolution would not come "at any price".

Ipic bought 70 per cent of Ferrostaal from MAN for about US$650 million (Dh2.38 billion) in 2009. Since then, however, Ferrostaal has become the target of a corruption investigation in Germany over contracts in several countries stretching back decades.

The dispute started last September when Ipic tried to rebuff MAN's attempt to exercise a "put" option forcing Ipic to buy the remaining 30 per cent of Ferrostaal. Ipic went to an arbitration court to block the move, arguing it was not properly apprised of possible corruption investigations at Ferrostaal when MAN sold the unit.

"Ipic is confronted with the consequences of a compliance scandal that refers back to the time when Ipic was not at all involved," the company said.

Resolving the dispute over Ferrostaal is a priority for MAN as it eyes an acquisition of Scania, a Swedish competitor. MAN needs to put the conflict with Ipic behind it before progressing with that deal, analysts and executives have said in recent months.

The chief executive of Volkswagen, which has a controlling stake in Scania and owns about 30 per cent of MAN, said this year a resolution with Ipic was a necessary precursor to any tie-up between Scania and MAN.

The attempts to resolve the dispute come as Ferrostaal faces another arbitration action filed by Abu Dhabi's Sultan International Holding (SIH).

That company alleges Ferrostaal did not go through the proper legal processes to switch its sponsorship in Abu Dhabi from SIH to Ipic after Ipic's acquisition of Ferrostaal.

* with agencies