AB Volvo on Tuesday, Feb. 20, offered to buy Japan’s Nissan Diesel for $1.1 billion in a deal to boost its presence in Asia and prepare for tougher emissions standards. Volvo says that including debt, the total cost of the acquisition will be $2 billion.
Volvo’s offer, which needs regulatory approval, will give it full ownership of Nissan Diesel from the current 19 percent. It highlights Volvo’s ambitions in Asia, where the company has lacked a local brand while owning Mack Trucks in the United States and Renault Trucks in Europe.
Chief Executive Leif Johansson says Volvo sped up the takeover plans to prepare for tougher emissions standards being introduced in Japan in 2010. “It’s important to do this deal now, and not in a few years,” Johansson says. “We have some very important emissions standards coming up, and in the short term we can share R&D on that.”
Nissan Diesel Motor Co. President Iwao Nakamura expressed support for the bid, saying it will save costs in development and purchasing, including emissions-reducing technologies, and present opportunities for efficient investments for long-term growth. The company is Japan’s fourth-largest truck maker, with a market share of about 24 percent in heavy trucks and 15 percent in the medium-heavy segment.
Jorma Halonen, executive vice president of Volvo Group, says Nissan Diesel’s strengths in Asia, including Thailand and Indonesia, are a good complement for Volvo. He says the company aims for 20 to 25 percent market share in Asia, about the same it controls in the United States and Europe. Nissan Diesel will retain its name, and its management will stay Japanese, Halonen says.
Goteborg, Sweden-based Volvo bought a 13 percent stake in Nissan Diesel in March 2006 from Tokyo-based Nissan Motor Co., and raised its holding to 19 percent in September. If approved by antitrust authorities, the latest deal would be completed by March 29, Volvo says.