China's Geely buys stake in Swedish truck maker Volvo

Ashley Carr
December 29, 2017

The deal makes Geely the biggest individual shareholder in AB Volvo and second ranked in terms of voting rights behind Swedish investment firm Industrivarden.

The move represents another step by Geely - China's most-acquisitive auto maker - to become a global player.

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".

Geely Holding bought Volvo Cars from Ford in 2010 and has been leveraging its ownership of the luxury carmaker to enforce its go-global strategy by marrying European styling and technology to Chinese production costs and manufacturing might.

AB Volvo owns 45 percent of Dongfeng Commercial Vehicles, one of China's largest truck makers, and also has a significant construction equipment business in China.

The value of the transaction was not revealed.

Volvo truck
AB Volvo makes trucks plant equipment and buses and is a separate business from the car company Credit Reuters

In its last full year, AB Volvo had sales of 301bn Swedish kronor (£27bn) and a pre-tax profit of 20.8 Skr.

The Chinese automaker, which is in a race to develop technologies such as autonomous driving, electrification and connectivity, this year bought a 49.9% stake in Malaysia's Proton Holdings well as 51% of British sports-car maker Lotus Cars.

Geely Automobile Holdings Ltd., the group's Hong Kong-listed stock, gained as much as 4.7% on Thursday to HK$27, the highest intraday level since 6 December.

Geely will take control of 88.47m of A-shares and 78.77m of B-shares, giving it control of 15.6% of the votes.

Nomura International Plc and Barclays Capital Securities Limited have agreed to acquire Cevian Capital's shares, and will sell them to Zhejiang Geely Holding Group when the necessary regulatory approvals have been obtained, the companies said.

Industrivarden declined to comment when contacted by Reuters.

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