China’s Geely Holding has agreed to buy an 8.2% stake in Swedish truck maker AB Volvo from activist investor Cevian Capital for roughly $3.3 billion.
Geely Holding already owns the Volvo Car Group.
Volvo Car Group was split from AB Volvo 20 years ago and Geely said it was not its current intention to attempt to reunite the two businesses.
Cevian said Geely has committed to acquire the AB Volvo shares following necessary regulatory approvals.
Cevian said the acquisition of the AB Volvo shares comprises 88.47 million A-shares and 78.77 million B-shares, corresponding to 8.2% of the capital and 15.6% of the votes “which represents the largest ownership in AB Volvo by capital and the second largest by votes” — excluding treasury shares.
Nomura International Plc and Barclays Capital Securities Limited have agreed to acquire Cevian Capital’s shares in AB Volvo and have committed to sell the shares to Geely Holding following the regulatory approvals.
Cevian Capital co-founder Christer Gardell, said: “Today’s announcement concludes over 11 years’ ownership in AB Volvo by Cevian Capital.
“During Cevian Capital’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. 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, such as electrification, autonomous driving, connectivity and the Chinese market.”
Geely Holding chairman Li Shufu said: “We are delighted to have reached agreement with Cevian to acquire its holding in AB Volvo, making us the largest shareholder by capital in a company that leads the world in many aspects of commercial vehicle development, manufacturing and sales.
“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.
“We will support the board of directors and the management of AB Volvo in their continued execution of the current strategy.”
Daniel Donghui Li, chief financial officer of Geely Holding, said: “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 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.”
Nomura International Plc acted as financial adviser to Cevian Capital. Linklaters and Freshfields acted as legal advisers to Cevian Capital and Geely Holding, respectively.