Money

China's Geely buys stake in Swedish truck maker Volvo from Cevian

China's Geely buys stake in Swedish truck maker Volvo from Cevian”

In May, Geely agreed to buy a 51% stake in British sports-car brand Lotus and a 49.9% stake in struggling Malaysian vehicle maker Proton Holding, which gave it a foothold in Southeast Asia.

How the deal impacts Volvo's relationship with Chinese truck maker Dongfeng, in which Volvo has owned a 45% stake since 2015, is unclear.

AB Volvo was the parent of Volvo Cars up until its sale to Ford Motor in 1999.

Volvo shares were down 1.5 percent to 157.6 Swedish crowns at 1050 GMT on December 27, valuing Geely's stake at roughly 26.4 billion crowns ($3.2 billion).

The value of the transaction was not revealed.

He said he is hoping that Geely's expertise in the domestic market and its skills in building electric and autonomous vehicles would help AB Volvo to expand.

Christer Gardell, co-founder of Cevian, said: "Today's announcement concludes over 11 years ownership in AB Volvo by Cevian".

FILE PHOTO: The logo of Swedish truck maker Volvo is pictured at the IAA truck show in Hanover, September 22, 2016. At the same time, the company stressed it remained committed to implementing its "Blue Geely Initiative" with plans to offer 40 models using hybrid, plug-in hybrid, or pure electric powertrains by 2020 and thereby "become a leader in the development of new energy vehicles".

However, Volvo shares have gained nearly 50 percent this year as it and rivals in the truck industry such as Germany's Daimler (DAIGn.DE) and Volkswagen (VOWG_p.DE) hit a sweet spot thanks to robust demand in major markets.

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According to the news feature, this would make the deal the most lucrative exit ever by an activist, according to Nomura, topping the €2.7 billion (Rs 20,638 crore) Icahn Enterprises made a year ago when selling American Railcar Leasing.

Cevian had called for a break-up of the company, suggesting the smaller Volvo Construction Equipment and engine and technology firm Volvo Penta should be separated from the main truck making business.

Geely owns Geely Auto, one of China's biggest independent automakers.

This June, Geely bought a 49.9% stake in Malaysia's Proton Holdings, as well as a 51% stake in British automaker Lotus.

Sales and profitability at Volvo Cars has jumped under Geely.

Geely announced the purchase on Wednesday and said the deal is pending regulatory approval.

The stake, representing 8.2% of Volvo's capital and 15.6% of the votes, would mark Hangzhou-based Geely's first foray into the heavy-truck segment.

Under the terms of the agreement, Cevian will sell all of its 88.47 million A-shares and 78.77 million B-shares in Volvo to Nomura International and Barclays Bank, Geely and Cevian said in a joint statement.

Industrivarden declined to comment when contacted by Reuters.



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