Volvo increases stake in Deutz to 25%

14 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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