Isuzu Motors Ltd. is set to acquire UD Trucks owned by Volvo Group for 250 Billion Yen ($1.3 Billion). This deal is said to be very beneficial for Volvo.
Volvo Group after negotiations has decided to sell its Japanese trucking unit UD Trucks for the total sum of 250 billion yen ($1.3 billion) to Isuzu Motors Ltd. Sources indicate that the deal was consummated after a series of talks that saw the current transaction structure emerge. The two rival global automakers will also move ahead as allies rather than as rivals in what seems as a consolidation of their positions for mutual benefit.
Based in Saitama, Japan, UD Trucks was sold to Volvo after belonging to Nissan Motor Co. Isuzu Motors which manufactured 530,000 vehicles last year will also be acquiring 100% of UD trucks. Sources have also pegged the strategic financial advantage to Volvo. As the deal will bring it 2 billion kronor in terms of its operating income and 22 billion kronor in terms of cash-based assets. This will aid the Swedish carmaker as it faces stiff competition from Asian and German automakers who have penetrated the European markets.
The deal is a part of a broader alliance that will enable them to participate in technology sharing that includes autonomous driving technology for trucks among others as the global Automotive industry shifts from hydrocarbon powered cars to electric vehicles. As a result, strategic partnerships are emerging and this sort of transaction is intended to foster the kind of innovation that will increase the adoption of new technologies. Isuzu President Masanori Katayama said:
“Amid this once-in-a-century industry shift, there are many partnerships, but an alliance between commercial vehicle makers is the most efficient. We can complement each other’s businesses.”
Sources further indicate that besides technology sharing, both companies have shown interest in activities to improve sales of both brands in the Asian Sub-region.
The deal will be completed at the end of next year as both parties prepare to enter into what is hoped to be a long-term partnership. It is also said that the purchase price of 250 billion yen may also change if the due diligence requirements also change as well.
As of the time of filing this report Isuzu’s share stood at 1,385 Japanese yen which is a 1.54% increase in value in the last twenty-four hours while Volvo Group prices stood at 155.45 kronor which indicates a 3.56% increase in the past 24 hours. This year Volvo stock has a great performance. It started a year at 115 kronor.
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