China's auto conglomerate Geely Holding adds Volvo Trucks to its portfolio after buying an 8.2% stake in AB Volvo from activist hedge fund Cevian Capital led by Christer Gardell. The acquisition gives Geely 15.6% voting rights in AB Volvo, which manufactures trucks, buses, construction equipment, diesel engines, and marine & industrial engines.
Geely will be buying 88.47 million A-shares and 78.77 million B-shares in AB Volvo from Cevian, making the Chinese conglomerate the largest individual shareholder of the Swedish truckmaker. The deal is estimated to be worth $3.25 billion, although both Geely and Cevian refused to disclose details on the value of the deal.
"We are delighted to have reached agreement with Cevian to acquire its holding in AB Volvo, making us the largest holder of share capital in a company that leads the world in many aspects of commercial vehicle development, manufacturing and sales," said Li Shufu, Geely Holding Chairman.
The new Volvo Trucks investment follows a string of acquisitions that begun in 2010 when the Chinese company bought Volvo Cars from Ford. It’s recent investments include London Electric Vehicle Company (LEVC) to make electric 'London Cabs’ in 2015; Malaysian automaker Proton and British sports car maker Lotus, in September of 2017; and flying car company Terrafugia, just last month, promising a production model by 2019.
"Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo," added Li.
"Today’s announcement concludes over 11 years ownership in AB Volvo by Cevian. During Cevian’s ownership, AB Volvo has been transformed into a more competitive and valuable company through strengthened governance, improved efficiency and increased focus on its core business. This is reflected in structurally improved profitability and a higher market value," said Christer Gardell, co-founder of Cevian.
Geely plans to utilize its expertise in electrification, autonomous function and connectivity to bring AB Volvo to the next-generation of the truck business.
Also under the Volvo Trucks portfolio are Mack Trucks, Renault Trucks, UD Trucks, Dongfeng Commercial Vehicles, and a joint venture with India’s Eicher Motors called VE Commercial Vehicles.
"Geely Holding will be able to contribute its global knowledge, Chinese market expertise and leading research and development capabilities especially in the fields of electrification, autonomous driving and connectivity, to AB Volvo to further its global development, and strengthen the Volvo brand," Daniel Donghui Li, Chief Financial Officer and Executive Vice President of Geely Holding.
Once the deal is finalized, Geely will become the largest single shareholder of AB Volvo, and have second rank in voting rights behind Swedish investment company Aktiebolaget Industrivärden, which has 18.7% voting rights and a 6.7% stake.