Volvo Group has agreed to sell its UD Trucks Unit to Japanese automotive manufacturer Isuzu for $2.3 billion. The transaction will add Volvo Group’s operating income by $212 million, increasing its cash position by $2.34 trillion.
UD trucks were once part of Nissan Motor Co. before Volvo bought the unit a decade ago.
The deal, which is set to close at the end of 2020, pushed shares of both companies. On the other hand, Volvo shares grew by 5.6% whereas Isuzu shares rose by 1.5%.
Moreover, Volvo will also build a strategic partnership with Isuzu, joining other consolidations in the automotive industry. The partnership will focus on developing next-generation truck technologies, such as autonomous driving and electric vehicles.
Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two Groups. We intend to derive the full value from each other’s different specialties across product and geographical strongholds. Our collaboration will actively contribute to service improvements and strengthening customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution.
Masanori Katayama, President, Isuzu Motors Limited.
According to a press release by Isuzu, the current MoU between the two companies is non-binding. However, the two companies intend to sign a binding agreement by mid-2020, finalizing the deal by the end of the year.