Zhejiang Geely Holding Group (Geely Holding), China's leading privately-owned automotive group, announced it has reached agreement with Cevian Capital (Cevian), Europe's largest activist fund manager, to acquire its entire 8.2% share capital holding and 15.6% voting rights in AB Volvo, the leading Swedish manufacturer of trucks, buses, construction equipment, diesel engines, and marine and industrial engines.
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. On completion and following necessary regulatory approvals, Geely Holding will become the largest holder of AB Volvo's share capital.
The strategic investment follows Geely Holding's 2010 acquisition of Volvo Car Group from Ford Motor Company, and will form part of an automotive manufacturing and investment portfolio that also includes a controlling stake in Geely Auto Group (Geely Auto: HK 0175) as well as strategic investments in PROTON Holdings Bhd, Lotus Advance Technologies and ownership of the London Electric Vehicle Company (LEVC) and the flying car company Terrafugia Inc.
Geely Holding Chairman Li Shufu said: "We are delighted to have reached agreement with Cevian to acquire its holding in AB Volvo, making us the largest holder of share capital in a company that leads the world in many aspects of commercial vehicle development, manufacturing and sales. Given our experience with Volvo Car Group, we recognise and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo. We will support the Board of Directors and the management of AB Volvo in their continued execution of the current strategy."
Christer Gardell, co-founder of Cevian, said: "Today's announcement concludes over 11 years ownership in AB Volvo by Cevian. During Cevian's ownership, AB Volvo has been transformed into a more competitive and valuable company through strengthened governance, improved efficiency and increased focus on its core business. This is reflected in structurally improved profitability and a higher market value. We are proud to have played a role in this positive development. AB Volvo is now leading the industry into a new era. The agreement will not only give AB Volvo a new large and committed shareholder, but one with significant expertise in strategically important areas for future value-creation."
Daniel Donghui Li, Chief Financial Officer and Executive Vice President of Geely Holding, added: "Geely Holding is a well-recognised strategic long-term investor, and as such we aim to contribute positively to the long-term development of AB Volvo. Geely Holding will be able to contribute its global knowledge, Chinese market expertise and leading research and development capabilities especially in the fields of electrification, autonomous driving and connectivity, to AB Volvo to further its global development, and strengthen the Volvo brand."
Source and top image: Geely Holding
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