Swedish commercial vehicle maker AB Volvo (VLVLY.PK, VOLVF.PK) announced Tuesday that its unit Volvo Construction Equipment or Volvo CE has agreed to purchase Swecon's select business operations for 7 billion Swedish kronor, and to sell its ownership in China-based SDLG for 8 billion kronor.
In a stetament, Volvo announced that the unit has signed a deal with Lantmännen, an agricultural cooperative, to acquire the Swecon's business operations in Sweden, Germany and the Baltics including Entrack, a provider of aftermarket products. The acquisition is anticipated to close in second half of 2025, subject to regulatory approval.
The acquisition includes Swecon's business scope in these markets. These include sales of products and services, rental operations, aftermarket services & support to customers as well as offices, workshop facilities and 1,400 employees.
For Volvo CE, the purchase is a strategic move to further invest in retail operations in key markets, such as Germany, which is Europe's largest construction equipment market, Sweden, Volvo CE´s home market, as well as Estonia, Latvia and Lithuania.
Separately, Volvo said that Volvo CE signed a contract to sell its entire stake of 70% of the shares in China-based Shandong Lingong Construction Machinery Co. or SDLG to a fund predominantly owned by SDLG minority owner Lingong Group for 8 billion kronor or RMB6 billion.
The sale is expected to have a positive effect of 1 billion kronor on operating income at the time of closing, subject to currency fluctuations.
Going forward, Volvo CE said it will focus on offering Volvo branded premium products and services to focused customer segments in China and enhance its utilization of the Chinese supplier eco system
It was in 2006 that Volvo CE acquired a majority stake in SDLG, with LGG as a minority shareholder. In 2024, the SDLG revenue contribution was around 2% of Volvo Group turnover with an insignificant impact on its operating income.
Closing of the sale is expected to occur in the second half of 2025, subject to regulatory approvals and other conditions.
The effect will be excluded from adjusted operating income. The transaction is also expected to have a negative tax impact of 1.6 billion kronor, subject to currency fluctuations.
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