FRANKFURT (Reuters) – Volkswagen shares rose on Tuesday after the group said it would press ahead with listing its Traton trucks unit, in what is set to be Germany’s biggest share offering so far this year.

FILE PHOTO: Visitors stand at the booth of Volkswagen’s truck unit Traton Group, former Volkswagen Truck & Bus AG, in Hanover, Germany September 19, 2018. REUTERS/Fabian Bimmer

Chief Executive Herbert Diess said proceeds of the Initial Public Offering, which Volkswagen previously postponed in March, would be invested in the company’s drive to create a global trucks business.

In a surprise move late on Monday, Volkswagen said its supervisory and management boards had agreed to resume preparations to list Traton before the summer break, subject to market conditions, which it previously blamed for the postponement.

Volkswagen’s shares rose as much as 2.8 percent before erasing some of their early gains to stand 0.8% higher at 0848 GMT.

The company’s finance chief Frank Witter said in a statement that “current market assessments” had encouraged it to proceed with the listing.

Volkswagen said previously it could list up to 25% of Traton, which includes the MAN, Scania and Volkswagen trucks businesses, to raise up to 6 billion euros ($6.7 billion).

Jefferies analyst Philippe Houchois said Traton was worth 15 billion to 16 billion euros. “A listing should be positive as the current VW balance sheet is in our view a constraint on Traton’s ability to execute on its ‘Global Champion Strategy’.”

The head of Volkswagen’s works council, Bernd Osterloh, said in a letter to staffers that he welcomed the decision but warned of the necessity to secure jobs.

Volkswagen also said it was looking into options for its MAN Energy Solutions business, which makes large diesel engines for ships and power generators, as well as transmissions maker Renk, including joint ventures, partnerships, a full or partial sale.

Reuters reported earlier this month that Volkswagen had approached several companies to gauge their interest in buying MAN Energy Solutions, which is expected to achieve a valuation of about 3 billion euros in a potential sale.

The moves are part of Diess’s efforts to slim down and simplify the group which has 12 brands covering trucks, buses, motorbikes, cars and electric bicycles as part of its business.

Osterloh, in his letter, said talks between labor representatives and management on Volkswagen’s restructuring plans were going well, adding that he believed a conclusion could be reached in May.

Aiming to modernize the company which has been grappling with the diesel emissions cheating scandal, Volkswagen’s leadership has embraced a pronounced strategic shift towards e-mobility, which requires less manpower to produce cars.

It said on Monday it would invest nearly 1 billion euros ($1.12 billion) in an electric vehicle battery cell plant in the north German city of Salzgitter, without giving details about potential partners for the venture.

VW executive board member Stefan Sommer on Tuesday told journalists that the company was already looking into opening additional battery production sites in Europe.

Reporting by Edward Taylor and Jan C. Schwartz; Writing by Tassilo Hummel; Editing by Kirsten Donovan

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