Volvo to invest $900m in joint venture with Chinese truck maker Dongfeng

Swedish truck maker AB Volvo (STO:VOLV-B) said it would pay CNY5.6bn (USD900m/EUR669m) for 45% in a new venture with Chinese peer Dongfeng Motor Group Company Ltd (HKG:0489), or DFG, in a move that would convert Volvo into the largest global heavy-duty trucks maker.

The venture called Dongfeng Commercial Vehicles (DFCV) will comprise most of DFG’s medium- and heavy-duty commercial vehicles operations, the buyer said. The deal, part of a strategic alliance between the two groups, will enhance Volvo and DFG’s positions, while ensuring great opportunities for both of them.

Volvo will contribute technological expertise and global presence, providing a significant potential to DFCV to expand and make profits outside China.
In turn, the Swedish group will become co-owner of China’s largest heavy-duty and medium-duty truck manufacturer, securing economies scales in terms of sourcing, development and production for its truck business, it said.

Completion is anticipated to take place in 12 months, pending clearance from Chinese regulators, among other conditions.

On a pro-forma basis, DFCV had net revenues of some CNY39bn and an operating profit of around CNY1.2bn, from the sale of about 142,000 heavy-duty trucks and 49,000 medium-duty trucks in 2011. It has some 28,000 employees.

French automotive group Renault its sells stake in Volvo for €1.48bn

French carmaker Renault SA (EPA:RNO) on Thursday said it had pocketed EUR1.476bn (USD1.93bn) from the sale of its 6.5% of the share capital and 17.2% of the votes of Swedish trucks and buses manufacturer Volvo AB (STO:VOLV-A; STO:VOLV-B).

The French group sold 138.6m Volvo AB series A shares, representing its entire holding in the series A shares, it said.

The disposal was announced on Wednesday, when Renault said it would complete its exit from Volvo AB, after the sale in October 2010 of its entire series B stake.

The funds raised through this recent sale would be used to cut its net automotive debt, as well as for investments in France in 2013, accounting for 40% of Renault’s total investments next year and strategic growth investments in Russia and China.

These moves are aimed at making Renault’s plants in Europe more competitive and supporting its international expansion, the vendor said.

Sweden’s Volvo increases stake in German diesel engine maker Deutz to 25%

Swedish industrial group AB Volvo (STO:VOLVA; VOLVB) said Wednesday it had agreed to raise its stake in German diesel engine producer Deutz AG (ETR:DEZ) to over 25% from 6.7% through the acquisition of 22m shares for EUR5.88 (USD7.36) apiece.

The agreed price represents a premium of 12% over Deutz’ average price in the last three months. The transaction, subject to certain conditions and regulatory approval, will make the Swedish company Deutz biggest shareholder. It is due to close in the third quarter of the year without any impact on Volvo’s financial results.

This move will help Volvo to widen its cooperation with Deutz in the medium-duty engines, Volvo’s chief executive Olof Persson said. Earlier in 2012, the two companies inked a memorandum of understanding to study a potential expansion of their long-term partnership and develop the next generation of medium-duty engines for off-road applications. The MoU also envisages the possible set-up of a Chinese joint venture to manufacture medium-duty engines.

Volvo currently holds 8.097m shares in Deutz.

Koeln-based Deutz is active in the design and production of diesel engines for both on-road and off-road applications. It runs production sites, 10 distribution companies, nine sales offices and has more than 800 partners in over 130 countries worldwide.

Volvo supplies commercial transport solutions, including trucks, buses, construction equipment, engines and drive systems for boats and industrial applications, industrial engines and systems, industrial IT solutions, logistics solutions, aircraft engine components, as well as services and support. It has production facilities in 20 countries and sales facilities in over 190 markets.