China's Zhejiang Geely Holding, parent of Geely Automobile holdings and owner of the Volvo vehicle brand, is buying an 8.2 percent stake in the Swedish truck manufacturer AB Volvo from Cevian Capital, worth around $3.3 billion and making Geely the truck manufacturer's largest shareholder.
Geely buying into the truck and industrial plant equipment could open up a massive new market in China to the company.
Geely Holding acquired the Volvo Car Group from Ford Motor Company in 2010 but says it has no plans to merge the two Volvo businesses, but sees potential for joint marketing.
The Chinese company will also become the second-largest owner of AB Volvo by voting rights after investment firm Industrivarden. Reuters reports that the business is worth approximately $3.3. billion.
"We will treat the new owners in the same way that we treat our other shareholders", a spokesman for AB Volvo said.
The Chinese automaker, which is in a race to develop technologies such as autonomous driving, electrification and connectivity, this year bought a 49.9% stake in Malaysia's Proton Holdings Bhd.as well as 51% of British sports-car maker Lotus Cars.More news: India's Reliance Jio to buy all wireless assets of Rcom
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The value of the transaction was not revealed.
In the latest deal, Geely will acquire 88.5 million A shares and 78.8 million B shares to give it 15.6 percent of Volvo voting rights.
Geely Automobile Holdings Ltd., the group's Hong Kong-listed stock, gained as much as 4.7% on Thursday to HK$27, the highest intraday level since 6 December.
Lynk & Co, a joint venture between Volvo Cars and its parent group Geely, started selling its first model last month, joining the competition in the mainland's mainstream auto segment which is dominated by foreign brands including Volkswagen, General Motors, Ford and Toyota. Industrivarden controls 22.8 percent of the votes.
We are delighted to have reached agreement with Cevian to acquire its holding in AB Volvo, making us the largest holder of share capital in a company that leads the world in many aspects of commercial vehicle development, manufacturing and sales.