Finance

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

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

While making a statement on the decision Geely Chairman Li Shufu said that by the virtue of its experience with Volvo Car Group, the company now totally understands and identifies itself with Scandinavian history, culture.

Geely Holding acquired the Volvo Car Group from Ford Motor Company in 2010 but says it has no plans to merge the two Volvo businesses, but sees potential for joint marketing.

The transaction would make Geely the biggest single shareholder in Volvo and the second-biggest holder of voting rights.

The value of the investment amounted to around 27.2 billion Swedish crowns ($3.26 billion), a Reuters calculation showed.

The truck brand owns 45% of Dongfeng Commercial Vehicles, one of China's largest truck manufacturers, as well as a significant construction equipment business. Geely and Cevian declined to disclose the exact value of the transaction.

While Volvo's shares initially rose on the deal, both the A and B shares traded more than 2.5 percent lower for the day at 1230 GMT, while Industrivarden's shares slipped 0.4 percent. "We will support the Board of Directors and the management of AB Volvo in their continued execution of the current strategy".

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So, will this mean a reuniting of the truck and construction vehicle arm of Volvo with Volvo Automobiles?

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

Shares of its Hong Kong-listed subsidiary Geely Automobile Holdings gained 0.6 per cent to HK$25.8 (US$3.30) on Wednesday, jumping 254 per cent from the close of past year.

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 agreement, Cevian has sold all of its 88.47 million A shares and 78.77 million B shares in AB Volvo to Nomura International and Barclays Capital Securities.



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