Swedish truck maker AB Volvo yesterday made a 7.5 billion krona (US$1.07 billion) offer to take over Japan's Nissan Diesel in a strategic move aimed at gaining a solid presence in Asia.
The move, which would raise Volvo's stake from 19 percent to full ownership of Nissan Diesel, highlights the company's ambitions in Asia's burgeoning truck market, where Volvo has lacked a local brand while owning Mack Trucks in the US and Renault Trucks in Europe.
Volvo is the world's second-largest truck maker after DaimlerChrysler AG of Germany, while Nissan Diesel is Japan's fourth-largest truck maker.
In a statement, Nissan Diesel Motor Co's board expressed support for the tender offer, saying the move would be positive for the company's troubled books, as well as for cost-savings in development and purchasing.
The ¥540 (US$4.52) per share cash offer represented a premium of 32 percent based on the Japanese company's average share price during the past three months, both sides said.
Nissan Diesel shares jumped 18 percent in Tokyo trading to ¥523 by midday, up from its Monday's close at ¥443. Volvo shares finished up 0.18 percent at Kr549 (US$78.11) in Stockholm.
"With Volvo as owner, Nissan Diesel gains the resources and the financial stability needed to fully capitalize on the opportunities that a closer cooperation offers to both parties," Volvo chief executive Leif Johansson said in a statement.
If approved by antitrust authorities, the deal would be completed by March 29, Volvo said.
Volvo, based in Goteborg, Sweden, became the top shareholder in Nissan in March last year, buying a 13 percent stake in Nissan Diesel from Tokyo-based Nissan Motor Co, and upped its holding to 19 percent in September.
At that time, Volvo said the deal would help balance the company's offerings of heavy trucks and give it broader geographical reach in Asia. Volvo sold its car division to US-based Ford Motor Co in 1999.
Nissan Motor, Japan's No. 3 automaker, which is allied with Renault SA of France, sold Nissan Diesel to better concentrate on its passenger car business.
Volvo yesterday said a joint study identified gains amounting to 200 million euros (US$263 million) annually for the next five years, mainly as a result of increased purchasing volumes, but also from product development and access to each other's dealerships and service networks.
"During our joint synergy study, great trust grew between the companies and I believe that the merger is the best alternative for Nissan Diesel's future," Nissan Diesel president Iwao Nakamura said in the statement.
If the takeover offer is approved, Volvo said it will have paid a total of 13 billion krona for Nissan Diesel, which holds a market share in Japan of about 24 percent in heavy trucks and 15 percent in the medium-heavy segment.
Volvo has 83,000 employees, while Nissan Diesel has about 9,100 employees.
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