China's Geely Buys Stake in Sweden's AB Volvo

Gladys Abbott
December 28, 2017

Geely said in a statement it had "reached agreement with Cevian Capital, Europe's largest activist fund manager, to acquire its entire 8.2% share capital holding and 15.6% voting rights in AB Volvo".

The Chinese auto maker that bought Volvo Cars seven years ago, will become the largest shareholder of the truck maker after the transaction is completed. Volvo Trucks is one of the world's leading manufacturers of heavy trucks but it needs the assistance of a company better entrenched in the rapidly expanding Chinese market.

"Given our experience with Volvo cars, we recognise and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo".

Li said Geely would support Volvo management's current strategy.

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"On completion and following necessary regulatory approvals, Geely Holding will become the largest holder of AB Volvo's share capital".

Volvo, founded in 1927, sold off its cars business to USA auto giant Ford in 1999, to concentrate on the commercial vehicles business. Reuters reports that Volvo Cars brought in $1.26 billion in the first three quarters of 2017, compared to just $193 million in 2011, the first full year of Geely's ownership.

The value of the transaction was not revealed. At the same time, the company stressed it remained committed to implementing its "Blue Geely Initiative" with plans to offer 40 models using hybrid, plug-in hybrid, or pure electric powertrains by 2020 and thereby "become a leader in the development of new energy vehicles".

"The deal helps Geely move into truck and engineering territories and has a positive impact on its globalisation drive", said Yale Zhang, the managing director of consultancy Automotive Foresight.

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