The Volvo Group (AB Volvo) has sold its complete holding in the German listed engine manufacturer Deutz AG.
It said divestment proceeds amount to SEK 1,897m, corresponding to SEK 62.73 per share (EUR 6.50). The sale will result in a capital gain of approximately SEK 350 M that will impact operating income in the third quarter of 2017.
Volvo Group has sold 30,246,582 shares, corresponding to 25% of total shares in Deutz. The sale will have a positive impact on Group cash flow and the net financial position in the Industrial Operations in an amount of SEK 1,897m. The capital gain will be reported in the segment “Group functions and Other”.
Deutz makes diesel engines for a wide range of applications and industries. It makes diesel engines and engine components for agricultural machinery, marine propulsion, automotive and off-highway construction equipment sectors.
Volvo increased its Deutz stake to 25 per cent in 2012, with a view to jointly developing a new generation of medium-duty engines for industrial applications with a particular focus on China. However, the China business never materialised.
According to Deutz, the sale of the investment has no impact on the strong business relationship with AB Volvo, which goes back many years.
“We will continue to work together closely with Volvo and will remain an important supplier, particularly in the Construction Equipment application segment,” Deutz chairman Frank Hiller said.
“Following the sale of the investment, we can focus on raising our profile as an independent manufacturer of innovative drive systems.”