Volvo Group to Acquire 45% of Dongfeng Commercial Vehicles
2013-02-05 Source：www.chinabuses.org
www.chinabuses.org: AB Volvo has signed an agreement with the Chinese vehicle manufacturer Dongfeng Motor Group Company Limited (DFG) to acquire 45% of a new subsidiary of DFG, Dongfeng Commercial Vehicles (DFCV), which will include the major part of DFG’s medium- and heavy-duty commercial vehicles business. Dongfeng is also a main manufacturer of bus chassis.
Completion of the transaction will make the Volvo Group the world’s largest manufacturer of heavy-duty trucks with a combined annual volume (2011) of 326,000 HD trucks and 98,000 MD trucks. The purchase price is RMB 5.6 billion (US$900 million); completion is expected to take place within approximately 12 months.
Volvo’s transaction with DFG follows an agreement between DFG and Nissan Motors, in which DFG purchased the medium- and heavy-duty commercial vehicle operation from the joint venture DFL (owned jointly by DFG and Nissan Motors). The major part of the re-purchased commercial vehicle operation will be included in the new company, Dongfeng Commercial Vehicles (DFCV).
Established in June 2003, DFL is a joint venture between Nissan and DFG which offers a full line-up of passenger vehicles and light-, medium- and heavy-duty commercial vehicles for sale in China. DFL had decided to spin-off its commercial vehicle section and concentrate its management resources on development of its passenger and light commercial vehicle businesses. Payment of the purchase price will increase Volvo’s net debt by approximately SEK 6 billion (US$929 million).
The Volvo Group claims to be the world’s third largest manufacturer of heavy-duty trucks with 180,000 units sold in 2011. Dongfeng was the second largest producer of heavy-duty trucks in 2011, with total sales of 186,000 units, of which approximately 142,000 units were produced by the part of the company that will be included in DFCV.
“We are pursuing a clear strategy to achieve our vision of becoming the world leader in sustainable transport solutions. With this agreement in place, we take a crucial step toward reaching a number of our key strategic objectives such as size and growth in Asia,“ Volvo’s President and CEO Olof Persson says.
In 2011, DFCV reported net sales of approximately RMB 39 billion (pro forma) and operating income of approximately RMB 1.2 billion (pro forma). DFCV has approximately 28,000 employees and sold 142,000 heavy-duty trucks and 49,000 medium-duty trucks in 2011 (pro forma), and an unknown amount of buses and bus chassis.
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