Volvo Cars' Chinese parent company buys $3.3 billion worth of AB Volvo

Dec 29, 2017, 01:03
Volvo Cars' Chinese parent company buys $3.3 billion worth of AB Volvo

Geely Holding Group (吉利控股) on Wednesday said the acquisition of shares from Cevian Capital AB, a fund manager, would give it 8.2 percent of Volvo's share capital and 15.6 percent of the voting rights.

Geely's move to buy Volvo will help further strengthen its global presence after its 2010 acquisition of Volvo Cars from Ford Motor Co. Under the terms of an agreement signed by Daniel Donghui Li, Chief Financial Officer and Executive Vice President of Geely Holding and Cevian in the presence of Christer Gardell, co-founder of Cevian, Geely Holding has committed to acquire Cevian's 88.47 million A-shares and 78.77 million B shares in AB Volvo, a press release from Geely reads.

The Chinese automaker, which is in a race to develop technologies such as autonomous driving, electrification and connectivity, this year bought a 49.9% stake in Malaysia's Proton Holdings Bhd.as well as 51% of British sports-car maker Lotus Cars.

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"We will treat the new owners in the same way that we treat our other shareholders", a spokesman for AB Volvo said.

Geely Automobile Holdings Ltd., the group's Hong Kong-listed stock, gained as much as 4.7% on Thursday to HK$27, the highest intraday level since 6 December.

Geely will take over all the shares from Nomura and Barclays following necessary regulatory approvals.

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Geely, the Chinese owner of the Volvo auto brand, is acquiring a piece of truck maker AB Volvo. Geely and Cevian declined to disclose the exact value of the transaction. China already has the largest automotive sector in the world, and development of the nation's infrastructure as its economy grows is likely to fuel demand for AB Volvo's products.

Li Shufu, chairman of Geely Holding, said he was delighted by the deal.

The mainland's finance ministry announced on Wednesday that a tax rebate on purchases of new-energy vehicles will be extended until the end of 2020, rather than the year-end in 2017, a move to further encourage development and manufacturing of electric and plug-in hybrids.

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