Volvo Cars completes Stockholm IPO plans
Volvo Cars, the Swedish automaker owned by Zhejiang Geely Holding Group Co. of China, is completing plans for an initial public offering and is expected to announce listing details as early as Monday, in a deal that could boost the automaker’s value. automobile to up to $ 25 billion, according to people familiar with the matter.
A listing, if it comes to fruition, would represent one of the auto industry’s most dramatic turnarounds. Ford engine Co.
, weakened by the global financial crisis, sold the Swedish company to Geely for $ 1.8 billion in 2010.
Volvo has long capitalized on a brand known for its safety, but at the time of its sale, its product line had failed to thrill car buyers. Geely funded Volvo’s takeover over the next decade, opening up China as a market for the brand and providing funding to help the company revamp its model offerings.
Today, Volvo is profitable, with a roadmap for the deployment of electric models ahead of some competitors. His brand is back in fashion in the United States and elsewhere. It is now in competition with high-end German brands, including the manufacturer BMW Bayerische Motoren Werke AG
, Volkswagen AG
Audi and Daimler brands AG
For the first half of this year, Volvo announced a 41% increase in sales compared to the same period last year, to 380,757 vehicles. The company’s sales in the United States increased 47% to 63,754 vehicles. Europe remains Volvo’s largest market.
With a valuation of 25 billion dollars, Volvo would be bigger than the European automaker Renault HER,
which has a market value of just over $ 10 billion. This is despite the fact that Volvo sells a fraction of the cars Renault sells each year. Volvo’s size, however, would pale against the world’s largest automakers, including General Motors. Co.
and Volkswagen, highlighting the competitive challenge facing the Swedish company. Its value is also said to be significantly lower than the market capitalization of electric vehicle leader Tesla of $ 767.5 billion. Inc.
Still, a listing would provide investors with another contender to bet on in an auto industry race to deploy electric vehicles. Volvo was the first conventional automaker to begin phasing out internal combustion engines, ending production of cars powered solely by fossil fuels in 2019. Since then, every new Volvo has been a fully electric or hybrid model.
Most of the major automakers have since said they will phase out conventional engines in new vehicles as well, by around 2035.
Volvo pitched the idea of a possible listing as early as 2018 and said in May that it was considering an IPO on the Stockholm Stock Exchange. Such a listing could offer the company a larger shareholder base and greater independence vis-à-vis its Chinese investors. In September, Reuters reported that Volvo was in talks to list its shares in the coming weeks.
It is not clear exactly what share Geely plans to sell, but he has previously indicated that he will likely remain a major shareholder after any offer. A decision on listing details and its public disclosure could be delayed, but people familiar with the plans said a final appeal is imminent.
An offer would come amid a frenzy of investor interest in electric vehicles and after a Volvo subsidiary focused on electric vehicles took its own initiative to capitalize on this enthusiasm.
Last week, Polestar, a Swedish electric vehicle maker jointly owned by Volvo, Geely and others, announced plans to merge with a specialist acquisition company and register in New York as part of a deal that would value the Swedish electric vehicle company at around $ 20 billion. .
Volvo Cars said last month that it plans to own almost 50% of the combined company after Polestar’s merger with Gores Guggenheim Inc. is finalized.
The Polestar deal allowed Volvo to continue its own offering by placing an estimated $ 10 billion worth of Volvo’s stake, according to some people familiar with Volvo’s listing plans.
Earlier this year, Volvo and Geely moved away from considerations of Volvo merging with Geely Auto Group, raising hopes that the company would pursue a separate listing and greater independence from Geely Holding.
“Volvo Cars is uniquely positioned to ensure continued growth and harness 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 SEK 50 billion, or roughly $ 6.47 billion at the time of the deal. At the time, Volvo had 28,000 employees and produced around 400,000 vehicles per year.
In 2009, when Ford put the company up for sale, Volvo was in trouble. After Geely intervened, he paid the money. Over the course of a decade, Geely has invested more than $ 11 billion, funding a modernization of the company’s model lineup, an early shift to electric vehicles, and factories in China that have helped Volvo take advantage of the China’s growing appetite for Western cars.
In 2018, Volvo opened its first factory in the United States. The brand was once a household name in American suburbs in the 1970s. But it had to rebuild its business in the world’s most lucrative auto market.
Volvo produces 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, high-end sport utility vehicle. Volvo has invested more than $ 1 billion in the plant and employs 1,500 people there. The company said its US plant will be the first to switch entirely to producing electric cars.
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