Geely buys stake in Volvo truck business for $3.2 billion

Geely buys stake in Volvo truck business for $3.2 billion”

China's Geely Holding [GEELY.UL], owner of the Volvo auto brand, is buying an 8.2 percent stake in Swedish truckmaker AB Volvo (VOLVb.ST) from activist investor Cevian Capital, worth around $3.3 billion at current market prices.

Geely announced the purchase on Wednesday and said the deal is pending regulatory approval.

Geely Holding acquired the Volvo Car Group from Ford Motor Company in 2010 but says it has no plans to merge the two Volvo businesses, but sees potential for joint marketing.

Volvo shares were down 1.5 percent to 157.6 Swedish crowns at 1050 GMT on December 27, valuing Geely's stake at roughly 26.4 billion crowns ($3.2 billion). He further stated that Geely would be supportive of Volvo's management and board as it implements its strategy.

Christer Gardell, co-founder of Cevian, said: "Today's announcement concludes over 11 years ownership in AB Volvo by Cevian".

While Volvo's shares initially rose on the deal, both the A and B shares traded more than 2.5 percent lower for the day at 1230 GMT, while Industrivarden's shares slipped 0.4 percent.

Lynk & Co, a joint venture between Volvo Cars and its parent group Geely, started selling its first model last month, joining the competition in the mainland's mainstream vehicle segment which is dominated by foreign brands including Volkswagen, General Motors, Ford and Toyota.

Cevian, which has held shares in Volvo since 2006, this year called for a break-up, suggesting the smaller Volvo Construction Equipment and engine and technology firm Volvo Penta should be separated from the main truck making business.

This June, Geely bought a 49.9% stake in Malaysia's Proton Holdings, as well as a 51% stake in British automaker Lotus.

Geely owns Geely Automobile Holdings Ltd (吉利汽車), one of China's biggest independent automakers.

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.

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