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Volvo to sell UD Trucks unit to Japan's Isuzu for US$2.28B

Swedish truck maker AB Volvo (publ) on Dec. 18 agreed to sell its UD Trucks unit to Japan's Isuzu Motors Ltd. as part of a new technology alliance within the commercial vehicles space.

Volvo said in a statement that its Saitama, Japan-based UD Trucks unit has an enterprise value of ¥250 billion, or about US$2.28 billion. Its sale will result in a positive impact of 2 billion kronor on the company's operating income and increase its net cash position by nearly 22 billion kronor at the time of deal closing. The unit generated revenue of 24 billion kronor in 2018, Volvo added.

The companies aim to sign binding agreements by mid-2020 and the transaction is expected to be completed by the end of 2020, subject to regulatory approvals.

The companies said their alliance will focus on expanding the reach of Isuzu and UD Trucks in Japan and overseas markets. They will also seek to enhance their technological capabilities and collobarate on widening their geographical reach and product line-up. All technology cooperation will be managed through individual contracts.

Volvo Group's stock rose 3.4% to 155.30 kronor per share during late-morning trading in Stockholm. Isuzu's shares closed 1.54% higher at ¥1,385 apiece in Tokyo.

As of Dec. 17, US$1 was equivalent to 9.38 kronor and ¥109.53.