China's Geely Holding Buys Strategic Stake in Volvo Trucks

Under the agreement, Geely will buy 88.47 million AB Volvo's A shares and 78.77 million B shares, representing 15.6% of the voting rights. He further stated that Geely would be supportive of Volvo's management and board as it implements its strategy.

Geely Holding also has stakes in the company that makes London's black cabs, sports carmaker Lotus, the London Electric Vehicle Company, and the Boston-based flying auto company Terrafugia Inc.

While making a statement on the decision Geely Chairman Li Shufu said that by the virtue of its experience with Volvo Car Group, the company now totally understands and identifies itself with Scandinavian history, culture. AB Volvo is now leading the industry into a new era.

Shares of its Hong Kong-listed subsidiary Geely Automobile Holdings gained 0.6 per cent to HK$25.8 (US$3.30) on Wednesday, jumping 254 per cent from the close of previous year.

The deal makes Geely the largest single shareholder in Volvo and the second biggest in terms of voting rights.

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Nomura International Plc and Barclays Capital Securities Limited have agreed to acquire Cevian Capital's shares, and will sell them to Zhejiang Geely Holding Group when the necessary regulatory approvals have been obtained, the companies 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, Cevian Capital cofounder Christer Gardell said. Geely and Cevian declined to disclose the exact value of the transaction.

"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.

According to the news feature, this would make the deal the most lucrative exit ever by an activist, according to Nomura, topping the €2.7 billion (Rs 20,638 crore) Icahn Enterprises made past year when selling American Railcar Leasing.

  • Ronnie Bowen