AB Volvo finishing in purchasing the shares of Deutz AG
Olof Persson. Photo source AB Volvo
The Swedish auto-concern AB Volvo has recently signed an agreement under which the company is purchasing the opportunity to step-up its shareholding in Deutz AG from 6.7% up to just over 25%. The former shareholder Same Deutz-Fahr Group is going to sell its shares to AB Volvo at a price of EUR 5,88 per share. The whole amount of shares AB Volvo will be of 22,117,693. At this moment the Swedish auto-concern has the holdings of shares in 8,097,754 shares in total.
A quarter of shares will cost AB Volvo EUR 130 millions. The completion of the transaction will be possible after the fulfillment of a set of conditions, including gaining of the approval of Competition Authority. AB Volvo will be the largest shareholder in Deutz AG after the finalizing of this transaction.
As Volvo’s CEO Olof Persson says, Deutz AG has been a significant supplier and partner during many years. That’s why the enlarging of shareholding is a quite natural step if taking into account plans to expand their commercial cooperation in manufacturing of medium-duty engines.
A little earlier this year, Deutz AG and AB Volvo signed a non-binding memo of understanding, according to which the companies would strengthen their long-term cooperation through the joint development of medium-duty engines for all-terrain applications of the next generation. Among the general aims of this memorandum of understanding is analyzing of the conditions in China for establishing a joint venture of the production of medium-duty engines for all-terrain applications.
It’s scheduled that the transaction will be finalized in the third quarter of this year. The realization of such transaction will not have any large material impact on the Volvo Group’s financial position or earnings. The price at EUR 5.88 per share was agreed during the negotiations and is corresponding to the average price for the share during three last months. Except for the price of shares AB Volvo will pay the former shareholders a premium of 12 per cents.
At this moment AB Volvo is the owner of such brands as Volvo, Renault Trucks, UD Trucks, Mack, Eicher, Volvo Penta, Volvo Aero, SDLG, Prevost и Nova Bus.