Volvo offers $1B for Nissan Diesel

[Plex]

Swedish truck maker AB Volvo made a $1 billion offer Tuesday to take over Japan's Nissan Diesel in a strategic move aimed at gaining a solid presence in Asia.

The move, which would give Volvo full ownership of Nissan Diesel from the current 19 percent, highlights Volvo's ambitions in Asia, where the company has lacked a local brand while owning Mack Trucks in the U.S. and Renault Trucks in Europe.

Volvo is the world's second-largest truck maker after DaimlerChrysler AG of Germany, while Nissan Diesel is Japan's fourth-largest truck maker.

Volvo said it estimates Nissan Diesel's net interest-bearing debt at $1.07 billion, bringing the total cost of its planned acquisition of the Japanese truck maker to 15 billion kronor, or $2.14 billion.

At a press conference in Stockholm, Volvo Chief Executive Leif Johansson said the deal would more than double the company's turnover, making it "a real supplier of trucks and buses on the Asian and Japanese markets."

"It is a good platform to develop our broader Asian business," he said.

Nissan Diesel Motor Co. President Iwao Nakamura expressed support for the tender offer, saying the move will save costs in development and purchasing, including emission-reducing technologies, and present opportunities for efficient investments for long-term growth.

"What we want the most is growth," he told reporters at a Tokyo hotel after the offer was announced. "This move is the most effective way to achieve growth."

The 540 yen ($4.52) cash per share offer, which represented a premium of 32 percent based on the Japanese company's average share price during the past three months, both sides said.

Nissan Diesel shares jumped 18 percent in Tokyo to a bid-only 523 yen ($4.37), up from its Monday's close at 443 yen ($3.71).

Volvo shares rose 2 percent to 560 kronor ($79.70) in early trading after finishing up 0.18 percent at 549 kronor in Stockholm a day earlier when news of the bid first broke.

Jorma Halonen, Executive Vice President of Volvo Group, said that Nissan Diesel would retain its name and that management will stay Japanese.

Volvo is aiming for 20 percent to 25 percent market share in Asia, about the same share the group controls in the U.S. and Europe, Halonen said in Tokyo, while declining to set a timeframe.

Nissan Diesel's strengths in Asia, including Thailand and Indonesia, are a good complement for Volvo, Halonen said. He said 100 percent ownership will help quicken decision-making, likely to prove critical in keeping abreast of upcoming more stringent emission requirements around the world.

Nissan Diesel holds a market share in Japan of about 24 percent in heavy trucks and 15 percent in the medium-heavy segment.

If approved by antitrust authorities, the deal would be completed by March 29, Volvo said.

Goteborg, Sweden-based Volvo became the top shareholder in Nissan in March 2006, buying a 13 percent stake in Nissan Diesel from Tokyo-based Nissan Motor Co., and upped its holding to 19 percent in September.

At that time, Volvo said the deal would help balance the company's offerings of heavy trucks and give it broader geographical reach in Asia. Volvo sold its car division to U.S.-based Ford Motor Co. in 1999.

Nissan Motor, Japan's No. 3 automaker, which is allied with Renault SA of France, sold Nissan Diesel to better concentrate on its passenger car business.

BusinessWeek.com