The Volvo Group has agreed to sell Volvo Rents to U.S. private equity firm Platinum Equity for approximately $1.1 billion (SEK 7.2 billion). Volvo CE will continue to sell products to Volvo Rents under the new ownership and customers will not be affected by the transaction.
“We looked at different alternatives to grow Volvo Rents’ business and concluded that the best alternative is to sell the operation to another owner. Volvo Rents’ business does not have a sufficiently strong connection with the group’s core operation to motivate continued ownership,” said Olof Persson, Volvo Group president and CEO.
The transaction is expected to have a negative impact on operating income in the segment “Group functions, corporate functions and other” within the Industrial Operation in an amount of approximately $230 million (SEK 1.5 billion) in the fourth quarter of 2013.
The transaction is expected to be closed in the first quarter of 2014 and have a positive impact on the cash flow for the Volvo Group of $1.1 billion (SEK 7.2 billion). The sale of Volvo Rents is expected to decrease the net financial debt for the Industrial Operation by 1$.1 billion (SEK 7.2 billion), corresponding to a reduction of the net financial debt to equity ratio for the Industrial Operation as calculated per the third quarter of 2013 by approximately 10 percentage points.
Volvo Rents, formed in 2001, offers rental of a range of machines intended for the construction and engineering industry, including Volvo CE products. Volvo Rents has operations in the U.S., Canada and Puerto Rico and has about 2,100 employees.
All of Volvo Rents’ employees will remain with the company as it is sold.
Completion of the transaction is subject to certain conditions, including the approval of relevant authorities.