Volvo CEO: Mack an ‘ideal partner’ for continuing North American expansion

STOCKHOLM, Sweden (April 25, 2000) — Following several weeks of negotiation, Volvo AB announced plans to buy the truck business of Renault VI/Mack in a stock deal worth $1.58 billion US.

The acquisition of Renault VI/Mack, which produces trucks under the Renault and Mack Trucks brands, would nearly double the volume of Volvo’s truck business and create the largest manufacturer of heavy trucks in Europe and the second largest in the world.

Combined, Volvo and Renault VI would control 28% of the heavy-truck market in Western Europe, and 24% in North America. The companies would be the third largest producer of diesel engines in the world.

“Mack is an ideal partner for continuing expansion of our North American truck operations,” said Volvo CEO Leif Johansson. “Mack is one of the world’s strongest brands in the industry and it has its own production of engines, which was a very important factor for us. We intend to achieve further critical mass in the engine sector that will permit us to make aggressive investments that will better enable us to meet demands from our customers and from society.”

Volvo said it planned to buy back Volvo shares amounting to 15% of the total number of shares in the company, and then transfer these shares to Renault in exchange for Renault VI/Mack. Renault VI said it would maintain its shareholding in Volvo for at least three years and may increase its share to no more than 20%.

The announcement comes seven years after talks about a full scale merger between the two companies ended, after the plan was voted down by Volvo shareholders.

Renault VI’s bus business, organized in the Irisbus company that is owned jointly by Renault and Iveco, is not included in the transaction, nor is Renault’s holding in Nissan Diesel of Japan.

During a conference call, Volvo Trucks North America CEO Marc Gustafson said there would not be a consolidation of the Mack and Volvo truck product lines or dealer networks in North America. He would not speculate on consolidation of the three engine brands produced by Renault/Mack and Volvo.