Renault successfully sells 14.9% in Volvo
The second-largest carmaker of France, Renault SA, sold a stake of 14.9% in Volvo for about 3 billion euros which is equal to $4.2 billion. The company took the advantage of a sudden increase in the shares of Swedish truckmaker’s to pay down the debt. The French carmaker said that the shares of around 302.9 million Class B were sold by Renault in a private placement . The company did not identify as to who bought the stock. Renault remains the largest stakeholder of Volvo. Renault gained the most in fourteen months in Paris trading.
Mike Tyndall, a London-based automotive specialist at Nomura Securities commented that it is tough to look at it in any other way than positively for Renault. He further added that they knew it will come to market at certain point but the timing came as a surprise. The constantly rising orders of commercial vehicles permitted Gothenburg, Sweden-based Volvo and Daimler and Scania to retreat estimates of earnings or increase their profit outlook at the present year. Earlier the shares of Volvo had advanced to around 57% over twelve months whereas Renault had got fifteen percent.
Since August 3, 2009 as much as 9.5% to 40 euros advance at Renault’s side, was the biggest raise. On the Stockholm exchange, Volvo was down 4.1% to 93.05 euros. This valued the truckmaker at $29.2 billion. As of June 30, Renault was with net industrial debt of 4.66 billion euros. It stated that it will maintain its holding of Class A shares of 138.6 million. Volvo, CEO Carlos Ghosn commented that Renault will be a major shareholder. He further added that the funds made from the placement will provide power to the balance sheet of Renault and this in turn, will help in preparation for the introduction of the new strategic plan of the company.
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