Volvo Construction Equipment likely headed for spin off - report (translated)
Story
Volvo Construction Equipment (VCE), the construction equipment operations of the listed Swedish truck manufacturer Volvo, will likely be spun off soon, according to Dagens Industri.
The Swedish business daily speculated that there are three reasons why a spin-off of VCE is likely to occur soon, the first being that Volvo is to gain competitor Scania's ex-Managing Director, Martin Lundstedt, as new MD in October and while Lundstedt is very knowledgeable about trucks, he knows less about the VCE market. Also, Lundstedt has been hired to improve Volvo's truck operations.
The paper also pointed out that Volvo's Chairman, Carl-Henric Svanberg, is known for conducting successful spin-offs in the past and that Volvo's activist shareholder Cevian Capital, will unlikely oppose spinning off VCE. The paper wrote that Industrivarden, which is also a significant shareholder in Volvo, has new management and is less likely to oppose such a deal than its previous management.
The paper reported further that the third reason why a spin-off is likely to occur is the fact that VCE would be better able to take advantage of its potential on its own. The item noted that VCE has a turnover of SEK 50bn (EUR 5.3bn) and would, in the event of a spin off and separate listing, become the 17th largest company on the Stockholm stock exchange in terms of turnover. The paper wrote that it is unlikely VCE could be sold due to difficulties in the Chinese market.
Meanwhile, the item also noted that VCE would benefit from growth via acquisitions after a spin-off, especially in the US. The paper speculated that a perfect way to do so would be to acquire American John Deere's VCE operations or even combine with American John Deere.
Dagens Industri