Volvo Cars completes plans to go public in Stockholm
Volvo Cars, the Swedish automaker owned by China’s Zhejiang Geely Holding Group Co., is finalizing plans to go public and will announce listing details as early as Monday in a deal that will leave the automaker valued at up to US $ 25 billion Dollars, so people familiar with the matter.
A listing, if it happens, would be one of the most dramatic turns in the automotive industry. Ford engine Co.
, weakened by the global financial crisis, sold the Swedish company to Geely in 2010 for $ 1.8 billion.
Volvo has long benefited from a brand recognized for its safety, but at the time of sale, its range of products hadn’t impressed car buyers. Geely funded Volvo’s recovery over the next decade, opening up China as a market for the brand and providing funding to help the company revamp its model range.
Today, Volvo is profitable, with an electric model adoption roadmap ahead of some of its competitors. His brand is back in style in the US and elsewhere. It now competes with German premium brands, including the BMW manufacturer Bayerische Motoren Werke AG
, Volkswagen AGs
Audi and Daimler brands AGs
For the first half of this year, Volvo reported a 41% increase in sales compared to the same period last year to 380,757 vehicles. The company’s US sales increased 47% to 63,754 vehicles. Europe remains the largest market for Volvo.
With a valuation of $ 25 billion, Volvo would be bigger than European automaker Renault SA,
that has a market value of just over $ 10 billion. That’s even though Volvo sells a fraction of the cars Renault sells each year. However, Volvo’s size would pale from the world’s largest automakers, including General Motors Co.
and Volkswagen, which underscores the Swedish company’s competitive challenge. Its value would also lag well behind the market cap of the leading electric vehicle, Tesla, of $ 767.5 billion Inc.
Still, listing would offer investors yet another competitor to bet on in an auto industry race for electric vehicle adoption. Volvo was the first conventional automaker to begin phasing out internal combustion engines and stop producing fossil-fuel-only cars in 2019. Since then, every new Volvo has been either an all-electric or a hybrid model.
Most major automakers have since announced that they will phase out conventional engines in new vehicles by around 2035 as well.
Volvo launched the idea of a possible listing back in 2018 and announced in May that it would consider going public on the Stockholm Stock Exchange. Such a listing could give the company a broader shareholder base and greater independence from its Chinese investors. In September, Reuters reported that Volvo was in talks about listing its shares in the coming weeks.
It’s not clear how big Geely’s stake is in selling, but it has previously indicated that after an offer he would likely remain a major shareholder. A decision on the details of the listing and its publication could be delayed, but people familiar with the plans said a final call was imminent.
An offer would come amid frenzied investor interest in electric vehicles and after an electric vehicle-focused Volvo subsidiary took its own step to capitalize on that excitement.
Last week, Polestar, a Swedish electric vehicle maker owned by Volvo, Geely and others, announced plans to merge with a special acquisition company in New York and be listed in New York.
Volvo Cars announced last month that after the completion of Polestar’s merger with Gores Guggenheim Inc., it is expected to own nearly 50% of the combined company.
The Polestar deal opened up a way for Volvo to pursue its own offering by allocating approximately $ 10 billion in value to Volvo’s stake, according to some of the people familiar with Volvo’s stock market plans.
Earlier this year, Volvo and Geely withdrew from considering Volvo’s merger with Geely Auto Group, raising expectations that the company would seek separate listing and greater independence from Geely Holding.
“Volvo Cars is particularly well positioned to achieve further growth and realize the full potential of electrification and the provision of safe autonomous driving functions,” said Eric Li, Chairman of Geely Holding, in May.
Ford bought Volvo in 1999 for 50 billion Swedish kronor, or about $ 6.47 billion at the time of the transaction. At the time, Volvo employed 28,000 people and produced around 400,000 vehicles a year.
When Ford put the company up for sale in 2009, Volvo was struggling. After Geely intervened, money flowed in. Over a decade, Geely invested more than $ 11 billion to fund a lineup upgrade, an early switch to electric vehicles, and factories in China that helped Volvo capitalize on China’s growing appetite for Western cars.
In 2018, Volvo opened its first US plant. The brand was a household name in the suburbs of America in the 1970s. But it had to rebuild its business in the world’s most lucrative auto market.
Volvo to manufacture the S60 sedan in Charleston, SC Next year the South Carolina plant plans to produce an electric version of the company’s XC90, a large premium sport-utility vehicle. Volvo has invested more than $ 1 billion in the plant and employs 1,500 people there. The company has announced that its US plant will be the first to convert entirely to electric car production.
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