Volvo To Buy Major Stake In Dongfeng Commercial Vehicles
AB Volvo said it will acquire a 45% stake in China’s Dongfeng Commercial Vehicles (DFCV), which is part of Dongfeng Motor Group (DMG), the largest heavy- and medium-duty building in China. Volvo will pay approximately $900 million and the transaction, which is subject to regulatory approval by Chinese authorities, is expected to closed within 12 months, Volvo said.
“This is a very exciting venture that will combine the best of two worlds, strengthening the positions of the Volvo Group and Dongfeng and offering excellent opportunities to both parties,” said Volvo President and CEO Olof Persson. “Combining Dongfeng’s strong domestic position and know-how with the Volvo Group’s technological expertise and global presence will offer DFCV excellent potential for growth and profitability in and outside China.”
In 2011, DFCV reported net sales of approximately $6.2 billion. It has approximately 28,000 employees and sold 142,000 heavy-duty trucks and 49,000 medium-duty trucks in 2011.
“China is the world’s largest truck market with a total market for heavy trucks equivalent to the European and North American markets combined,” Persson said. “The partnership between the Volvo Group and DFG will strengthen DFCV’s already strong position in China and provide the company with the right conditions for successful international expansion.”
The DFCV management team will consist of eight members, with Volvo nominating four of the eight members. Dongfeng will nominate the company’s managing director, while Volvo will be responsible for nominating the chief financial officer. The Board of DFCV will comprise seven board members and it has been agreed that the Volvo Group will account for three positions.