Geely Speeds Into Volvo Truckmaker Deal

Chinese privately-owned automaker Zhejiang Geely Holding Group has agreed to buy an 8.2% stake in Swedish truckmaker AB Volvo from Europe’s largest activist fund manager, Cevian Capital.

Geely announced the purchase on Wednesday and said the deal is pending regulatory approval.

Under the agreement, Geely will buy 88.47 million AB Volvo’s A shares and 78.77 million B shares, representing 15.6% of the voting rights. Geely’s voting power in Volvo will be second only to Swedish investment firm Industrivarden, which holds 22.82% of AB Volvo’s voting power, according to AB Volvo’s third-quarter financial report.

But Geely will become the Swedish truckmaker’s largest shareholder in terms of its 8.2% total stake.

Reuters reported that the value of the deal is about $3.3 billion at current market prices.

Under the agreement, Nomura International Plc — a financial adviser to Cevian — and Barclays Capital Securities Ltd. have agreed to acquire Cevian’s shares and will sell them to Geely after regulatory approvals.

Yang Xueliang, Geely’s vice president, told Caixin that AB Volvo welcomed Geely’s investment.

“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 Holding Chairman Li Shufu said in a statement on Wednesday.

The investment extended a tie between Geely and Volvo forged seven years ago when Geely bought Volvo Cars Corp. Volvo Cars was split from AB Volvo and sold to Ford in 1999.

Geely successfully turned Volvo Cars back to profit in 2013 after years of losses. In the first half this year, Volvo Cars reported a 21% increase in operating profit, with sales in China jumping 27.6%.

Geely has made several high-profile overseas deals. This year, Geely bought 49.9% of Malaysian brand Proton and 51% of its sports-car marque Lotus.

It also paid undisclosed amount to acquire Terrafugia, a U.S.-based startup that has been designing flying cars.

Sources told Caixin that Geely offered to buy a 3%-to-5% stake in German auto giant Daimler AG last month but was rejected.

Contact reporter Han Wei (weihan@caixin.com)