SWEDEN: Mutual benefits seen in Volvo/Nissan Diesel merger

AB Volvo says it will spend SEK7.5bn (US$1.07bn) to acquire all shares in Japan's Nissan Diesel and assume net interest-bearing debt at the truck maker, estimated at another SEK7.5bn (US$1.07bn).

"With Volvo as owner, Nissan Diesel gains the resources and the financial stability needed to fully capitalize on the opportunities that a closer cooperation offers to both parties," Leif Johansson, Volvo Group chief executive officer, was quoted as saying.

Volvo currently holds 19% of share capital in Nissan Diesel and preference shares which can be converted, giving it an additional 27.5%, after full dilution. Volvo will offer ??540 (US$4.51) in cash for all the shares it does not own.

The Gothenburg-based truck and bus maker's offer for Nissan Diesel represents a premium of 32% based on average prices over the past three months. The offer is open up to 23 March and is not conditional upon a lowest level of acceptance, but is dependent on the necessary approvals from the anti-trust authorities, the company stated.

Volvo expects to make payments for the acquired shares on 29 March and if the takeover offer is approved, it will have paid a total of SEK13bn (US$1.85bn) for Nissan Diesel.

Johansson noted that the Japanese truck manufacturer holds a solid position in Japan and the rest of Asia, where the Volvo Group foresees substantial growth potential. Nissan Diesel also has considerable expertise in medium-heavy trucks and hybrid technology.

Volvo stated that a joint study identified synergy gains amounting to ?‚¬200m (US$263m) annually for the next five years, mainly as a result of increased purchasing volumes, but also from product development and access to each other's dealerships and service networks.

Nissan Diesel holds a market share in Japan of about 24% in heavy trucks and 15% in the medium-heavy segment.

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