Renault Motors and Dongfeng Motor Group Co., Ltd. ("Dongfeng Motor Group") will be cleared out of cooperation barriers.
Yesterday, the Volvo Group announced that the board of directors decided to openly bid for Japanese truck manufacturer Nissan Diesel. As the Volvo Group currently holds 58.2 million shares of Nissan Diesel (about 19% of voting rights and capital) and 57.5 million shares of preferred stock, if the bidding is successful, the Volvo Group will become the largest shareholder of Nissan Diesel and it is expected to pass. In alliance with Nissan Corporation, Renault Trucks, a subsidiary of the Volvo Group, has entered into a joint venture with Dongfeng Motor Group.
Volvo Group China stated that the Volvo Group will purchase a stake in Nissan Diesel Co., Ltd. at a price of 540 yen per share for a total purchase price of SEK 7.5 billion. The purchase price was 1.32 times the average stock price of Nissan Diesel in the past three months. The Volvo Group plans to pay the purchase price before March 29, 2007.
Prior to this, the reporter was informed: Dongfeng Motor Group is negotiating with Volvo Cars and Nissan Motors, and the three parties plan to jointly produce commercial vehicles. However, the talks will continue for a long time and there is still no news. According to sources, one of the reasons is that Volvo Group and Dongfeng Motor Group have differences in their joint venture location. Volvo Group hopes to be located in Guangzhou, while Dongfeng Motor Group is in favor of Hubei. Another reason is that China's automobile policy is an obstacle. According to the “Automobile Industry Policyâ€: Any multinational automobile company can only have a maximum of two joint venture partners in a commercial vehicle or passenger vehicle project. The Volvo Group already owns three joint ventures of China Commercial Vehicles partners, namely Shenwo Bus, West Bus and Hua Waka.
In the industry's view, the Volvo Group has three commercial vehicle joint venture partners that can not retroactively process before the new "Automotive Industry Policy" is issued. However, if you want to break through this policy and find new joint venture partners, it is difficult to obtain policy approval. Therefore, after Volvo Group and Nissan establish a strong strategic alliance and capital ties, they can use a joint venture of Nissan Co., Ltd. or Nissan Diesel.
If this is successful, the Volvo Group will achieve its dual goals. On the one hand, the Volvo Group succeeded in obtaining additional Chinese joint venture names, enabling Renault Automotive to achieve localized production in China in the future; on the other hand, Volvo Group could enjoy synergies with joint ventures with Japanese companies. According to statistics, in the next five years, the cooperation between Volvo and Nissan Diesel will generate a synergy effect of approximately 200 million Euros (slightly more than 1.8 billion SEK) per year.
At present, most of the most cost-competitive automobile companies in Japan are in the international market. Nissan Diesel is Japan’s fourth-largest truck manufacturer. In 2005, Nissan Diesel sold 42,000 units, which accounted for 24% of the Nissan heavy truck market and 15% of the medium-sized truck market, of which nearly 40% were sold overseas. The market (mainly Europe and the United States); its total sales is SEK 32.5 billion.
Following the completion of this acquisition, Jorge Halone, Deputy CEO of Volvo Group, will be appointed Vice Chairman of Nissan Diesel. Yoma Narona said that "Nissan Diesel will benefit from the Volvo Group's resources and technology, while Nissan Diesel's experience in medium trucks and hybrid technologies will also benefit Volvo."
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