China's Zhejiang Geely Holding, parent of Geely Automobile holdings and owner of the Volvo vehicle brand, is buying an 8.2 percent stake in the Swedish truck manufacturer AB Volvo from Cevian Capital, worth around $3.3 billion and making Geely the truck manufacturer's largest shareholder.
The transaction will make Geely the biggest single shareholder in Volvo and the second biggest holder of voting rights. And along with Volvo Cars, it past year launched a new brand, Lynk & Co., to sell mid-priced vehicles positioned between Geely's lower-priced vehicles and Volvo.
Geely also owns the Volvo vehicle brand.
AB Volvo makes trucks plant equipment and buses and is a separate business from the car company Credit Reuters
Volvo shares were down 1.5 percent to 157.6 Swedish crowns at 1050 GMT on December 27, valuing Geely's stake at roughly 26.4 billion crowns ($3.2 billion). Geely and Cevian declined to disclose the exact value of the transaction.
Li said Geely would support Volvo management's current strategy.
Christer Gardell, co-founder of Cevian, said: "Today's announcement concludes over 11 years ownership in AB Volvo by Cevian". AB Volvo is now leading the industry into a new era.
Cevian, which has held shares in Volvo since 2006, this year called for a break-up, suggesting the smaller Volvo Construction Equipment and engine and technology firm Volvo Penta should be separated from the main truck making business.
Shares of its Hong Kong-listed subsidiary Geely Automobile Holdings gained 0.6 per cent to HK$25.8 (US$3.30) on Wednesday, jumping 254 per cent from the close of previous year.
In June, Geely Holding bought 49.9 per cent of Malaysian carmaker Proton and 51 per cent of iconic British sports vehicle marque Lotus Cars.
In a sign of its ambitions, the Chinese company last month offered to take a stake of up to 5 percent in Daimler via a discounted share placement but was rebuffed, according to sources with knowledge of the talks.
The stake, representing 8.2% of Volvo's capital and 15.6% of the votes, would mark Hangzhou-based Geely's first foray into the heavy-truck segment.
Industrivarden declined to comment when contacted by Reuters.