By Max Bernhard
Zhejiang Geely Holding Group Co., the owner of Volvo Car, said it has agreed to acquire a stake in Swedish truck and bus maker Volvo AB valued at $3.24 billion, marking another big step in the Chinese auto maker's push outside its home country.
Geely said Wednesday it has reached an agreement with Cevian Capital to acquire the private-equity firm's entire 8.2% share capital holding and 15.6% voting rights in Volvo AB, making it the largest shareholder in the company.
Both Volvo brands have been under separate ownership since Volvo AB agreed to sell its car-manufacturing operations to Ford Motor Co. for $6.5 billion in 1999.
In 2010, Geely paid Ford $1.8 billion for Volvo Car and has since plowed billions of dollars into the brand, reshaping it to become a force in new technology such as electric cars, connected vehicles and self-driving cars. Earlier this year, Volvo Car said all of its new models from 2019 would be either fully electric or a hybrid.
"Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo," said Li Shufu, Geely's chairman.
The move marks a further step in Geely's bid to become a global player. The Chinese auto maker has outperformed its sluggish domestic market this year, with sales rising 80% in the first nine months of 2017. But a lack of brand recognition globally has pushed it to seek global growth through acquisitions.
In May, it agreed to buy a 51% stake in British sports-car brand Lotus and a 49.9% stake in struggling Malaysian car maker Proton Holdings Bhd., giving it a foothold in the Southeast Asian market.
Geely also set up a domestic commercial vehicle unit called Yuan Cheng last year. Yuan Cheng could benefit from the Volvo AB deal in much the same way as Geely benefited from the acquisition of Volvo Car, from which it gained technology and know-how.
Geely isn't the only Chinese car maker to have taken a shine to well-established global brands. Earlier this year, Great Wall Motor Co. confirmed an interest in taking over Fiat Chrysler Automobiles NV's lucrative Jeep brand, known for rugged sport utilities and which is valued at more than $20 billion.
Volvo AB has grown sales and profit steadily over the past year, while its share price has risen around 50%.
Trefor Moss in Shanghai contributed to this article.
Write to Max Bernhard at [email protected]
Corrections & Amplifications
This article was corrected at 7:16 a.m. ET because it incorrectly referred to one company as Cinven Capital. Its name is Cevian Capital.