China’s Geely buying stake in Swedish truck maker Volvo
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The Chinese owner of Sweden’s Volvo Cars is buying a stake in truck manufacturer AB Volvo, expanding a portfolio of vehicle brands that includes shares in Malaysia’s Proton and Britain’s Lotus.
Geely Holding Group said Wednesday the acquisition of shares from Cevian Capital, a fund manager, would give it 8.2 percent of Volvo’s share capital and 15.6 percent of voting rights. Financial terms weren’t disclosed, though analysts estimated the value of the deal at around 27 billion kronor ($3.3 billion).
The Swedish company, which also makes buses, construction equipment and diesel engines, was the parent of Volvo Cars until 1999, when it was sold to Ford Motor Co. Geely bought Volvo Cars in 2010.
“We recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo,” said Geely chairman Li Shufu in a statement.
The transaction will make Geely the biggest single shareholder in Volvo and the second biggest holder of voting rights. Christer Gardell, the co-founder of Cevian Capital, said Geely would be able to provide Volvo with valuable access to the Chinese market and know-how in the field of electric and self-driving vehicles.
Li said Geely would support Volvo management’s current strategy.
Geely owns Geely Auto, one of China’s biggest independent automakers. It agreed in May to buy 49.9 percent of Proton and 51 percent of Lotus, which was owned by the Malaysian automaker.
Geely also launched a new brand, Lynk & Co., in 2016.
Questions & Answers
Q.What is the extent of Geely's stake in AB Volvo after this acquisition?
What is the extent of Geely's stake in AB Volvo after this acquisition?
Geely will own 8.2 percent of AB Volvo's share capital following the acquisition. This stake will also give them 15.6 percent of the voting rights in the company, making them the biggest single shareholder overall.
Q.Who was the previous owner of the stake Geely is acquiring in AB Volvo?
Who was the previous owner of the stake Geely is acquiring in AB Volvo?
Geely is acquiring the shares in AB Volvo from Cevian Capital, a fund manager. This transaction involves a significant part of Cevian Capital's holdings in the Swedish truck manufacturer.
Q.How will Geely's acquisition of the stake in AB Volvo benefit the Swedish company?
How will Geely's acquisition of the stake in AB Volvo benefit the Swedish company?
Geely's acquisition will provide AB Volvo with valuable access to the Chinese market. It will also offer know-how in the rapidly developing fields of electric and self-driving vehicles, according to Cevian Capital's co-founder.
Q.What other vehicle brands are currently part of Geely Holding Group's portfolio?
What other vehicle brands are currently part of Geely Holding Group's portfolio?
Geely's portfolio already includes Volvo Cars, which they bought in 2010. They also hold shares in Malaysia's Proton and Britain's Lotus, and launched their own new brand, Lynk & Co., in 2016.