STOCKHOLM, Dec 27 (Reuters): China's Geely Holding , owner of the Volvo car brand, is buying an 8.2 per cent stake in Swedish truckmaker AB Volvo from activist investor Cevian Capital, worth around $3.3 billion at current market prices.
Geely's expertise in the Chinese market and skills in developing electric and autonomous vehicles should help the truckmaker to expand, although there were no plans to reunite with Volvo Cars, which was split from AB Volvo in 1999.
AB Volvo owns 45 per cent of Dongfeng Commercial Vehicles, one of China's largest truckmakers, and also has a significant construction equipment business in China.
"Given our experience with Volvo Car Group, we recognise and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo," Geely Holding Chairman Li Shufu said in a statement on Wednesday.
There are "no plans to merge" the two Volvos, a Geely spokesman confirmed when contacted by Reuters. Both companies are based in Gothenburg, Sweden's second largest city. The value of the investment amounted to around 27.2 billion Swedish crowns ($3.26 billion), a Reuters calculation showed.
Swedish daily Dagens Nyheter said Geely paid 3.25 billion euro ($3.86 billion) for the stake, citing a source with knowledge of the deal. Geely and Cevian declined to disclose the exact value of the transaction.
The deal makes Geely the biggest individual shareholder in AB Volvo and second ranked in terms of voting rights behind Swedish investment firm Industrivarden. "We will treat the new owners in the same way that we treat our other shareholders," a spokesman for AB Volvo said.
The transaction was initiated at Geely's request, Cevian co-founder Christer Gardell told Reuters. "This has been a very profitable investment for us, we have made almost 20 billion Swedish crowns on this one," Gardell added, referring to an involvement that began in 2006.
Cevian will use the proceeds for new investments, and it is currently buying into another company, Gardell added.
© 2024 - All Rights with The Financial Express
