VOLVO, PROCORDIA MERGER BARRED

The Swedish government-owned food and drug manufacturer Procordia, and Sweden's car manufacturer, Volvo, reached an agreement allowing Volvo to become a majority shareholder in Procordia last week, but the Swedish government has rejected the proposed merger and was holding urgent talks with Volvo as the Marketletter went to press. Should the deal finally be allowed to go ahead, it would be Sweden's first privatization of a state-owned comp-any and one of Europe's biggest mergers.

The news of the agreement sent Procordia's shares plummeting, as the general feeling about the merger is that it would be good for Volvo, but not for Procordia. The latter's B-free shares dropped 6.6% in trading at the start of last week. Procordia, which controls Kabi Pharmacia, is offering nine of its shares for every four Volvo shares. Sweden's Prime Minister Carl Bildt said that the deal was "unacceptable" as it would mean too great a loss for the state.