STOCKHOLM • Zhejiang Geely Holding Group is set to become the largest shareholder in Volvo AB, after Cevian Capital decided to sell its stake in the Swedish truckmaker that the activist investor was seeking to break up.
The Chinese car manufacturer plans to buy Cevian's 88.5 million Class A Volvo shares and 78.8 million Class B shares, corresponding to 8.2 per cent of the capital and 15.6 per cent of the votes, the companies said on Wednesday.
The deal is valued at about €3.25 billion (S$5.2 billion), people familiar with the matter said, verifying a figure reported earlier by Swedish newspaper Dagens Nyheter. With the purchase, Geely, which owns the Volvo Car brand that Volvo AB sold almost two decades ago, is making a foray into the heavy truck and bus segment, and extending its bid to bulk up outside of China.
Geely in September bought a 49.9 per cent stake in Malaysia's Proton Holdings, as well as 51 per cent of British sports-car maker Lotus Cars.
Geely, owned by Chinese billionaire and founder Li Shufu, bought the Volvo Car name plate from Ford Motor in 2010 and is moving the brand upscale after reviving it. The Chinese firm plans to use the new tie-up with Volvo AB to enhance the truckmaker's electrification, autonomous driving and connectivity.
In addition to its namesake heavy-vehicle brand, Volvo AB's marques include Mack, Renault Trucks and UD.
Cevian has long wanted Volvo AB, Europe's second-biggest maker of commercial vehicles, to take steps such as divesting its construction-equipment business to streamline. While no large restructuring along those lines emerged, Volvo AB has disposed of its information-technology business and cut jobs. In September, it set a margin goal for the first time since 2012.
Cevian will use sales proceeds for new investments or to raise current holdings, said co-founder Christer Gardell. The "timing is good" for the disposal after the investment firm helped transform the truckmaker "from a mediocre company into a very good company", he said. Cevian has one seat on the Volvo AB board held by Mr Eckhard Cordes, a partner at the investment firm and a former executive at Daimler.
Swedish Enterprise Minister Mikael Damberg said he welcomed the new investor in Volvo AB, which is the country's largest company by revenue. "The new owner Geely has proven to be a serious investor linked to the development of Volvo Cars, made major investments in Sweden, grown the number of employees and has so far been a success story," he said to news agency TT.