Serving the World's Largest Emerging Automobile Market
Home > M&A's > Global empire grows: Geely acquires strategic stake in AB Volvo, becomes largest shareholder

Global empire grows: Geely acquires strategic stake in AB Volvo, becomes largest shareholder

HANGZHOU – Geely Holding Group’s rapidly expanding global empire just got bigger, literally and figuratively.

The private automaker has acquired an 8.2 percent share capital and 15.6 percent voting rights in AB Volvo, becoming the largest shareholder in the leading Swedish manufacturer of trucks, buses, construction equipment, diesel engines, and marine and industrial engines.

The agreement was reached on December 27 with Cevian Capital, Europe’s largest activist fund manager. It comes seven years after Geely’s acquisition of Volvo Cars.

Under the terms of an agreement signed by Daniel Li, executive vice president and CFO of Geely, and Christer Gardell, co-founder of Cevian, Geely has committed to acquire Cevian’s 88.47 million A-shares and 78.77 million B-shares in AB Volvo. On completion and following necessary regulatory approvals, Geely will become the largest holder of AB Volvo’s share capital. The acquisition was valued at about €3.025 billion.

The strategic investment will form part of an automotive manufacturing and investment portfolio that also includes a controlling stake in Hong Kong-listed Geely Automobile Holdings as well as strategic investments in PROTON Holdings Bhd, Lotus Advance Technologies and ownership of the London Electric Vehicle Company (LEVC) and the flying car company Terrafugia Inc.

“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 Geely Holding Chairman Li Shufu. “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. We will support the Board of Directors and the management of AB Volvo in their continued execution of the current strategy.”

“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,” said Gardell. “This is reflected in structurally improved profitability and a higher market value. We are proud to have played a role in this positive development. AB Volvo is now leading the industry into a new era. 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.”

“Geely Holding is a well-recognized strategic long-term investor, and as such we aim to contribute positively to the long-term development of AB Volvo,” said Daniel Li. “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.”

Under the terms of the agreement reached, Cevian Capital have sold all of its 88.47 million A-shares and 78.77 million B-shares in AB Volvo to both Nomura International Plc and Barclays Capital Securities Ltd, which in turn have committed to sell all the shares to Geely following necessary regulatory approvals.

By becoming the largest shareholder in AB Volvo, Geely also becomes an indirect shareholder in Dongfeng Commercial Vehicle Co., Ltd. (also known as Dongfeng Trucks), the 55:45 heavy-duty truck joint venture between Dongfeng Motor Group (DFG) and AB Volvo that was formally established in January 2015. DFCV is currently China’s second largest heavy-duty truck manufacturer by sales volume behind FAW Jiefang.

Geely has a goal of becoming a global top 10 automaker by 2020 with annual sales reaching 2 million units.

| | | | | | |

Leave a Reply