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Investing.com -- Volvo (OTC:VLVLY) has agreed to sell its 70% stake in Chinese construction equipment manufacturer Shandong Lingong Construction Machinery Co for approximately $833 million to minority shareholder Lingong Group.
The Swedish company acquired the stake in 2006, which provided access to the domestic Chinese construction equipment market.
The deal is expected to close in the second half of 2025.
"Shandong Lingong Construction Machinery Co has served us well since 2006," said Melker Jernberg, head of Volvo Construction Equipment.
"However, with increasing competition, and the need to transform to new technologies as well as strengthen interaction with customers, we need to re-focus."
Following the sale, Volvo’s construction equipment business plans to concentrate on offering Volvo branded products and services in China.
The company’s operations in China will continue to serve as a production and development hub for both domestic and export markets.
The business being sold represents about 2% of Volvo’s group turnover and has had minimal impact on the group’s operating income.
Volvo expects the transaction to have a positive effect of 1 billion kronor (approximately $833.3 million) on operating income when the deal closes.
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