AB Volvo is set to acquire a 96 percent equity stake in the Nissan Diesel Motor Co. owing to a friendly takeover bid for it by the Swedish truck maker, Nissan Diesel said. The acceptance period, which started on 21 February, has already expired. Hence, Nissan Diesel, Japan’s fourth-largest truck maker, will now become a subsidiary of the Swedish automaker.
The automaker has undertaken another hot acquisition and this is a deal that a Volvo thermostat could very well handle. “It is pleasing that we received such a level of acceptance,” said Volvo’s CEO Leif Johansson. “We foresee major mutual benefits for the Volvo Group and Nissan Diesel with this transaction and it is highly satisfying that owners in Nissan Diesel share this view.”
It can be recalled that in March 2006, Volvo became the biggest shareholder of Nissan Diesel. The Swedish automaker was offered Y540 ($4.58) in cash per share of the Japanese automaker. Volvo is second only to DaimlerChrysler AG in the global truck industry. It owned 19 percent of Nissan Diesel before the start of the takeover bid.
The Swedish automaker has received over two thirds of the shares in Nissan Diesel. Moreover, a process involving the redemption of the remaining shares outstanding is now in progress. This practice is in accordance with the Japanese law. In addition, Volvo postponed its first quarter interim report until May 11 this year because Nissan Diesel will not be releasing its year-end report for 2006 until such date.
When the offer period expired, the Swedish automaker received 294,585,705 shares corresponding to roughly 96 percent of the total number of votes and capital in Nissan Diesel. The figure includes the 19 percent of the votes and capital owned by the Swedish automaker before the offer was given. In addition, Volvo owns all 57.5 million preference shares in Nissan Diesel.
As for the remaining four percent stake held by other shareholders, Nissan Diesel is said to acquire the shares for resale to its parent company. Volvo said that it wants to acquire Nissan Diesel to strengthen its eco-friendly technology and operations in the fast-growing Asian countries.
Volvo and Nissan Diesel estimate they could achieve synergy worth about 200 million euros ($2.6 million) yearly in the next five years. This could be achieved through joint venture of auto parts and shared sales networks. Volvo estimates that the remaining shares will be redeemed by about 30 September of this year.
The Swedish automaker and Nissan Diesel have agreed the latter will keep its brand identity and corporate culture. Eventually, it is expected that the Tokyo Stock Exchange will delist Nissan Diesel. Completion of the transaction requires the approval of the anti-trust authorities in the United States and South Africa. Volvo has now received approval from the American authorities. Also, the Swedish automaker expects to receive approval in South Africa at the end of May. In other respect, the automaker considers that the transaction is deemed fulfilled.
About the Author
Glady Reign is a 32 year old is a consultant for an automotive firm based in Detroit, Mi. She is a native of the motor city and grew up around cars hence her expertise in the automotive field.