Volvo 2000 Annual Report Download - page 20

18
BOARD OF DIRECTORS’ REPORT
The Volvo Group year 2000
Volvo forms Volvo Global Trucks
On January 2, 2001, AB Volvo’s acquisition of Renault’s truck operations, Mack and
Renault V.I., became effective. The acquisition implies that AB Volvo acquires all the
shares of Renault V.I. in exchange for 15% of AB Volvo’s shares. The agreement was
approved by the competition authorities in the European Union and the U.S. during the
second half of 2000, after Volvo and Renault agreed to make certain concessions. The
main consessions mean that AB Volvo will divest the LCOE business (special trucks
with Low Cab Over Engine) conducted by Volvo Trucks in the U.S., within three months
following the approval from the U.S. competition authorities and that AB Volvo will
divest its holding in Scania (see also the adjoining factbox). In connection with the acqui-
sition of Mack and Renault V.I., Renault V.I. Finance was acquired for approximately FRF
154 M.
Volvo’s repurchase of Company shares
During 2000, Volvo’s Board of Directors effected a repurchase of Company shares
amounting to 10% of the total number of Volvo shares. As a result a total of SEK 11.8 bil-
lion was transferred to Volvo’s shareholders. The repurchase was made in order to finance
the acquisition of Renault V.I. The repurchased shares were transferred to Renault on
January 2, 2001 as partial payment for the shares of Renault V.I. (see note 21, page 65).
Volvo acquires an interest in Mitsubishi Fuso Truck and Bus Company
At the end of July, 2000, Volvo and Mitsubishi signed a contract specifying the condi-
tions for Volvo’s acquisition of 19.9% of the shares in Mitsubishi Fuso Truck & Bus
Company, a company to be formed in conjunction with the transformation of the truck
and bus division into a subsidiary of Mitsubishi Motors. According to the agreement,
Volvo will provide a capital contribution to Mitsubishi Fuso Truck & Bus Company total-
ing about SEK 3.2 billion in exchange for newly issued shares amounting to 19.9% of the
company’s capital and voting rights. After the agreement was reached, DaimlerChrysler
renegotiated its agreement with Mitsubishi, resulting in ongoing discussions with respect
to the future cooperation between Volvo and Mitsubishi.
Agreement on new bus company in China
In June, Volvo Buses and Shanghai Automotive Industry Corporation (SAIC) signed an
agreement covering the establishment of a joint-venture company to produce and sell city
and commuter buses.
Volvo Aero divests its truck components manufacturing
In February 2000, the Swedish engineering group Finnveden took over Volvo Aero’s truck
components manufacturing operations in Trollhättan, with annual sales of approximately
SEK 300 M. The sale was part of Aero’s program of concentrating on its core operations.
New business area for Volvo’s finance operations
At January 1, 2000, Volvo’s finance operations have been organized in Volvo Financial
Services, a new business area. Financial Services includes the Volvo Group’s customer-
financing operations, the insurance business, treasury and real estate operations.
Volvo’s planned acquisition
of Scania
On March 14, 2000, the European
Commission rejected Volvo’s proposed
acquisition of Scania. Based on the
Commission’s decision, Volvo was not
able to fulfill the agreement to acquire
Investor’s holding in Scania, or to imple-
ment the public offer to Scania’s share-
holders. Volvo’s present holding in
Scania amounts to 30.6% of the voting
rights and 45.5% of the share capital in
the company. The shares were acquired
at an average price of SEK 267 per
share. AB Volvo will have to divest its
holding in Scania within a period of up to
three years from the approval from the
U.S. competition authorities of the
acquisition of Mack and Renault V.I.
January February March April May June July August September October November December January February
2000 2001
An eventful year