Volvo increases stake in Deutz to 25%

By Helen Wright14 June 2012

Olof Persson, president of Volvo Group.

Olof Persson, president of Volvo Group.

Swedish construction equipment manufacturer Volvo has increased its shareholding in German engine specialist Deutz from 6.7% to over 25% - a deal that propels it to being the company's single largest shareholder.

Volvo spent €130 million buying shares from Same Deutz-Fahr Group (SDF) at a price of €5.88 per share. SDF is an agricultural equipment manufacturer which initially made its strategic investment in Deutz back in 2003 to pursue an industrial collaboration.

The deal - which is subject to regulatory approval - leaves SDF with a share of 8.44% in Deutz.

Volvo CEO Olof Persson said Deutz had been an important supplier and partner for many years. "The increase in our shareholding in the company is a natural step in light of our plans to expand our commercial co-operation in medium-duty engines."

Volvo and Deutz signalled the potential for closer ties in April, when they signed an agreement to explore the joint development of the next generation of medium-duty engines for off-road applications. The memorandum of understanding also aimed at analysing the conditions for establishing a joint venture in China for the production of medium-duty engines for off-road applications.

The transaction is expected to be finalised in the third quarter of this year.

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