Chinese billionaire Li turns gaze on Volvo trucks after cars

Bloomberg

About a decade after Chinese billionaire Li Shufu bought the Volvo Car nameplate from Ford Motor Co. and revived the brand, he’s turning his attention to the Swedish company’s heavy vehicles in a bid to bulk up outside China.
Li’s Zhejiang Geely Holding Group Co. said it plans to buy a stake in Volvo AB from activist investor Cevian Capital AB, making it the truckmaker’s largest shareholder. The deal is valued at about $3.9 billion, people familiar with the matter said separately, verifying a figure reported by Swedish newspaper Dagens Nyheter.
The stake, representing 8.2 percent of Volvo’s capital and 15.6 percent of the votes, would mark Hangzhou-based Geely’s first foray into the heavy-truck segment.
In addition to its namesake heavy-vehicle brand, Volvo AB’s marques include Mack, Renault Trucks and UD. The Chinese automaker, which is in a race to develop technologies such as autonomous driving, electrification and connectivity, bought a 49.9 percent stake in Malaysia’s Proton Holdings Bhd as well as
51 percent of British sports-car maker Lotus Cars in 2017.
“Geely is becoming a full-range transportation company and seems to be defining itself as a company that moves people and things,” said Bill Russo, managing director of Gao Feng Advisory Co. and a former head of Fiat Chrysler Automobiles NV’s Chrysler unit in China. “Any device that does this is on their radar.”
Geely plans to buy Cevian’s
88.5 million Class A Volvo shares and 78.8 million Class B shares, the two companies said. The Chinese company made an unsolicited approach at the beginning of autumn, seeking to buy out Cevian’s stake, following which the activist investor hired Nomura Holdings Inc. as an adviser, a person familiar with the matter said, adding Volvo wasn’t involved in the process. Joakim Kenndal, a spokesman at Gothenburg-based Volvo, said the stake sale “came as a surprise,” declining to comment further because the deal is a matter for the shareholders. Geely spokesmen declined to comment on the transaction beyond the company statement.
Geely plans to seek board representation, the person said. Cevian has one seat on the Volvo board, held by Eckhard Cordes, a partner at the investment firm and a former executive at Daimler AG. Hakan Samuelsson, the CEO of Geely’s Volvo Car Group, also sits on the truckmaker’s board.
Nomura and Barclays Plc agreed to buy Cevian’s stake in Volvo and sell it to Geely once the purchase has regulatory approval, the Chinese carmaker said.
Cevian has long wanted Volvo, 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 has disposed of its information-technology business and cut jobs, and it set a margin goal for the first time since 2012. Cevian will use proceeds from the stake sale for new investments or to raise current holdings, co-founder Christer Gardell said, declining to give a figure or disclose possible purchases. 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.