Truck maker Volvo has finalized its agreement to buy Renault’s RVI truck division and U.S. subsidiary Mack Trucks Inc. in exchange for a 15 percent stake in the Volvo group.
Announcement of the deal, worth $1.5 billion, came as Volvo posted a 2.8 percent drop in second-quarter income due to reduced demand in North America.
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The Renault deal, first announced in April, will create the world’s second-largest manufacturer of heavy trucks if approved by EU and U.S. competition authorities. Renault, based in France, plans to increase its stake in Volvo as high as 20 percent by buying more shares in the open market.
Volvo, based in Sweden, said its net income for the April to June period totaled 1.89 billion kronor ($207.9 million), down from 1.94 billion kronor at the same time last year.
Sales also declined in the second quarter to 33.5 billion kronor ($3.7 billion) from 33.9 billion kronor a year ago, although they remain 5 percent higher for the first half of the year at 64 billion kronor.
Volvo said it was helped by positive market conditions in Asia and South America and steady profit development in all business areas, but that its results were hurt by reduced demand and excess production in North America.
Net income for the first half of 2000 was 3.15 billion kronor, down from 29.49 billion kronor a year earlier, which included a capital gain of 27 billion kronor from the sale of Volvo’s car division to Ford Motor Co.
Operating income rose 12 percent to 3.8 billion kronor for the first six months of this year, excluding last year’s capital gain.
Volvo, which has 54,646 employees, had a net income of 32.2 billion kronor last year.
