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Volvo Cars' Chinese parent company buys $3.3 billion worth of AB Volvo


China's Geely Holding [GEELY.UL], owner of the Volvo vehicle brand, is buying an 8.2 percent stake in Swedish truckmaker AB Volvo (VOLVb.ST) from activist investor Cevian Capital, worth around $3.3 billion at current market prices.

While making a statement on the decision Geely Chairman Li Shufu said that by the virtue of its experience with Volvo Car Group, the company now totally understands and identifies itself with Scandinavian history, culture.

Geely Holding bought Volvo Cars from Ford in 2010 and has been leveraging its ownership of the luxury carmaker to enforce its go-global strategy by marrying European styling and technology to Chinese production costs and manufacturing might.

Earlier this month, China Central Television reported that Geely is interested in acquiring a 3% to 5% stake in Germany's Daimler AG, the parent company of Mercedes-Benz, for about 4 billion euros ($4.7 billion). Geely and Cevian declined to disclose the exact value of the transaction.

Geely's Chief Financial Officer Daniel Donghui Li said the company is "a well-recognised strategic long-term investor", and aims "to contribute positively to the long-term development of AB Volvo".

The transaction was initiated at Geely's request, Cevian co-founder Christer Gardell told Reuters.




Volvo's B shares traded 0.8 percent higher for the day at 0935 GMT, while Industrivarden's shares were flat.

This move by Geely continues the company's trend of acquisitions over the last few years.

Geely owns Geely Automobile Holdings Ltd (吉利汽車), one of China's biggest independent automakers.

In the latest deal, Geely will acquire 88.5 million A shares and 78.8 million B shares to give it 15.6 percent of Volvo voting rights.

In June, Geely Holding bought 49.9 per cent of Malaysian carmaker Proton and 51 per cent of iconic British sports vehicle marque Lotus Cars. Industrivarden controls 22.8 percent of the votes.

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