Chinese Carmaker Geely Buys Stake In AB Volvo

Chinese Carmaker Geely Buys Stake In AB Volvo

For an estimated $3.3 billion, Chinese auto maker Zhejiang Geely Holding Group is buying a roughly 8.2% stake in Sweden's AB Volvo, which builds commercial trucks, construction equipment, and marine vessel engines.

Geely, the Chinese owner of the Volvo vehicle brand, is acquiring a piece of truck maker AB Volvo.

"Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo", Geely Chairman Li Shufu said in a statement as the deal was announced. Their investment in AB Volvo may fuel speculation about them being recombined, although a Geely spokesman told Reuters there were no plans for such a move. Both companies are based in Gothenburg, Sweden's second largest city.

How the deal impacts Volvo's relationship with Chinese truck maker Dongfeng, in which Volvo has owned a 45% stake since 2015, is unclear. "We will support the Board of Directors and the management of AB Volvo in their continued execution of the current strategy". Geely and Cevian declined to disclose the exact value of the transaction.

Cevian will use the proceeds for new investments, and it is now buying into another company, Gardell added.

However, Volvo shares have gained nearly 50 percent this year as it and rivals in the truck industry such as Germany's Daimler (DAIGn.DE) and Volkswagen (VOWG_p.DE) hit a sweet spot thanks to robust demand in major markets.

Geely also launched a new brand, Lynk & Co., in 2016.

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

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.

Sales and profitability at Volvo Cars has jumped under Geely.

Geely buying into the truck and industrial plant equipment could open up a massive new market in China to the company.

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.

Selling the stake in the company was Cevian Capital - an investor group.

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