Volvo could generate up to SEK 60bn (EUR 6.4bn) by selling non-strategic stakes and assets
Volvo [STO:VOLV-A], the Swedish truck manufacturer, could generate up to SEK 60bn (EUR 6.4bn) by selling non-strategic holdings and assets, according to Dagens Industri.
The Swedish business daily reported that Martin Lundstedt is set to take over as new CEO of Volvo next week and speculated that he will likely investigate closely which holdings and assets are strategic for the company and which can be sold off.
The paper also wrote, citing unnamed sources, that some of Volvo's major shareholders are unhappy with the fact that the company owns so many assets that lead to very little or no return, such as Volvo's private jet company, Blue Chip Jet. The paper calculated that Volvo gain SEK 60bn by selling off non-strategic company holdings, assets and real estate.
The paper listed several holdings which are unlikely to be seen as strategic and may therefore come up for sale. The paper also cited Volvo's Investor Relations manager, Christer Johansson, who confirmed that the company will have to consider whether or not to dispose of anything which is deemed non-strategic, but that he did not wish to comment on which holdings or assets may be involved.
The item pointed to Volvo's 25% in the Mongolian mining truck and fire engine maker, Mongolia Hauler Joint Stock [SHA:600262], a stake which is worth around SEK 2bn (EUR 214m).
Another possible candidate for disposal is American second-hand truck vendor, Arrow Truck Sales, which is thought to be worth SEK 2-3bn (EUR 214-321m). The paper also mentioned Volvo's 25% stake in the German engine producer, Deutz [ETR:DEZ], which could be worth around SEK 1bn (EUR 107m) and San Francisco-based Volvo Group Venture Capital which could raise SEK 1bn (EUR 107m) if its portfolio is sold.
The paper also pointed to Volvo Information Technology with a turnover of SEK 9.7bn (EUR 1bn) as well as Volvo's vast real estate portfolio which Danske Bank estimated in an analysis to be worth up to SEK 40bn (EUR 4.3bn).
A Danske Bank analyst said that Volvo should place all of its real estate in one company and list it in Stockholm. He said that Volvo would distribute the company to its shareholders and retain a controlling stake.
Danske Bank calculated that spinning off the properties would increase Volvo's shareholder value by 15%. Meanwhile, Volvo's Christer Johansson commented that properties used for production by the company are seen as very strategic and will not be disposed of.
The original article appeared in print, Page 6.
Source Dagens Industri