Geely buys stake in Volvo Trucks

Jon Howard
December 29, 2017

Volvo Cars became independent since AB Volvo sold it to the Ford Motor Company in 1999.

Geely, the Chinese owner of the Volvo auto brand, is acquiring a piece of truck maker AB Volvo. It purchased The London Electric Cab Co. along with majority stakes in PROTON Holdings and Lotus Cars.

Volvo's B shares traded 0.8 percent higher for the day at 0935 GMT, while Industrivarden's shares were flat.

Geely's chairman Li Shufu said that AB Volvo "leads the world in many aspects of commercial vehicle development, manufacturing and sales".

Zhejiang Geely Holding Group [GEELY.UL], as the company is formally known, is the parent company of Geely Automobile Holdings Ltd (0175.HK).

Daniel Donghui Li, Chief Financial Officer and Executive Vice President of Geely Holding, added: "Geely Holding is a well-recognised strategic long-term investor, and as such we aim to contribute positively to the long-term development of AB Volvo".

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Geely will take over all the shares from Nomura and Barclays following necessary regulatory approvals.

Geely, which also owns Volvo Cars, said it had reached an agreement with Cevian Capital to acquire the investment firm's 8.2% equity stake and 15.6% voting rights in Volvo AB, making it one of the largest shareholders in the company.

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.

"The deal helps Geely move into truck and engineering territories and has a positive impact on its globalisation drive", said Yale Zhang, the managing director of consultancy Automotive Foresight.

Geely would be able to provide Volvo with valuable access to the Chinese market and know-how in the field of electric and self-driving vehicles, Cevian Capital cofounder Christer Gardell said.

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