AB Volvo has made a public offer to acquire Japanese truck maker Nissan Diesel for SEK 7.5 billion (U.S. $1.1 billion)—a move that would double AB Volvo’s global medium-duty volume as well as give the OEM a foothold in Asia.
In 2005, Nissan Diesel sold approximately 42,000 trucks and buses with about 64% of its sales based in Japan. Globally the combined companies would add 19,000 medium-duty units to AB Volvo’s operations annually, doubling the OEM’s current volume to about 38,000.
In spite of this lift AB Volvo, the world’s second-largest truckmaker after DaimlerChrysler AG, will still lag behind the 126,000 annual unit sales by DCX and 90,000 by GM-Isuzu based on 2005 data. Johansson acknowledged that although the Nissan Diesel acquisition alone won’t turn AB Volvo into a global market leader in medium-duty trucks, it does nonetheless represent significant growth in its own volumes.
“Nissan Diesel holds a solid position in Japan and the rest of Asia where Volvo Group forsees substantial growth potential,” said Volvo AB CEO Leif Johansson. “Volvo can benefit greatly from Nissan Diesel’s experience of medium-duty trucks and experience of medium-duty trucks and its expertise in, for example, hybrid technology.”
Volvo expects to achieve a synergy savings of SEK 1.8 billion annually in five years through volume purchasing, distribution and sales and some research and development in the short term. Long term Volvo expects to achieve synergies in product planning, manufacturing and research and development. The companies will also share access to each other’s deal networks and service networks, primarily in Asia.
AB Volvo’s $1.1 billion offer represents a 32% premium based on average prices during the past three months. In March 2006, Volvo acquired a 13% share of Nissan Diesel and has since expanded its share to 19% in September.
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