China’s Geely Auto has purchased a $3.8 billion (Rs 24,004 crore) stake in Volvo Trucks, making the Chinese owner of Volvo Cars the biggest shareholder of the truck-making Volvo Group, as per the Financial Times.
In a record realignment between the two Swedish automotive businesses, Zhejiang Geely is set to pay about $3.8 billion (Rs 24,004 crore) to Cevian Capital, Europe’s largest activist investor, for a stake in the Volvo Group with 8.2 percent of the capital and 15.6 percent of the vote.
According to the report, the talks of reuniting the two brands — split up when Volvo Group sold Volvo Cars to Ford in 1999 — is “premature”, according to people close to the transaction. But Geely sees this as a potential for joint marketing between the two Volvos, shared technology projects on issues such as autonomous driving and electric vehicles, and the chance to help the truckmaker perform better in China where it has struggled, the people added.
Geely has surprised the automotive world with its resurrection of Volvo Cars since its acquisition of the Swedish carmaker in 2010. The Volvo Group itself has largely been turned around in the 11 years, for which Cevian has been a shareholder with the Swedish activist making a profit of about €2 billion (Rs 15,288 crore) on its stake. 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 last year when selling American Railcar Leasing.
Li Shufu, chairman of Geely Holding, said he was delighted by the deal. “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.” He further stated that Geely would be supportive of Volvo’s management and board as it implements its strategy.
Christer Gardell, Cevian’s co-founder, said the activist was happy to have helped the Volvo Group become a more competitive and valuable company. “The agreement will not only give AB Volvo a new large and committed shareholder, but one with significant expertise in strategically important areas for future value creation, such as electrification, autonomous driving, connectivity and the Chinese market.”