Volvo aims to buy Nissan Diesel for $1 billion

Volvo makes bid for Nissan Diesel

AB Volvos Board of Directors has decided to make a public offer to acquire the Japanese truck manufacturer Nissan Diesel. The offer, which is supported by Nissan Diesels Board of Directors, means that Volvo offers JPY 540 in cash per share and the total value of Volvos offer amounts to SEK 7.5 billion (?? 211.5m). Volvo already owns a 19% holding in Nissan Diesel and preference shares which can be converted to an additional 27.5%, after full dilution.

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, says Volvo CEO Leif Johansson.

Volvos offer for Nissan Diesel represents a premium of 32% based on the average prices during the past three months. The offer is open through March 23 and is not conditional upon a lowest level of acceptance, but is dependent on the necessary approvals from the anti-trust authorities. Volvo anticipates that payment can be made for acquired shares on or about March 29, 2007. If the offer for Nissan Diesel is implemented, Volvo will have paid a total of SEK 13 billion for all shares, corresponding to JPY 469 (?? 2) per share.

Nissan Diesels products and know-how represent a valuable complement to the Groups truck business, says Leif Johansson. Nissan Diesel holds a solid position in Japan and the rest of Asia where the Volvo Group foresees substantial growth potential. A merger offers both parties even greater possibilities to learn and benefit from each others know-how and resources.

During our joint synergy study, great trust grew between the companies and I believe that the merger is the best alternative for Nissan Diesels future, says Iwao Nakamura, President of Nissan Diesel.

Since Volvos first purchase of shares in Nissan Diesel, Volvos Deputy CEO Jorma Halonen was appointed Vice Chairman in Nissan Diesels Board. Jorma Halonen sees major mutual advantages with an even closer cooperation.

Nissan Diesel can benefit from the Volvo Groups resources and know-how, but Volvo can also benefit greatly from Nissan Diesels experience of medium-heavy trucks and its expertise in, for example, hybrid technology, he says.

The study of co-ordination possibilities carried out jointly by Volvo and Nissan Diesel identified synergies over five years of about EUR 200M (?? 135m) annually. The major portion of the integration gains is as a result of increased purchasing volumes, but positive effects also arise within product development, engines and drivelines. Other gains arise in that the companies have access to each others dealer and service networks, primarily in Asia but also in other parts of the world.

Volvo assesses that the net interest-bearing debt in Nissan Diesel in accordance with IFRS amounts to about SEK 7.5 billion. Accordingly, at full consolidation Volvos net financial position - including the purchase consideration - will decline by SEK 15 billion.

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