Volvo Group and Isuzu Motors look at strategic alliance

Volvo Group and Isuzu Motors intend to form strategic alliance

Volvo Group and Isuzu Motors have recently signed a non-binding Memorandum of Understanding with the intent to form a strategic alliance within commercial vehicles, saying that they intend to capture opportunities in the ongoing transformation of the industry.

191218-volvo-isuzu-alliance.jpgIn a first step, the alliance will look to establish a global technology partnership and to create a stronger, combined heavy-duty truck business for Isuzu Motors and UD Trucks in Japan and across international markets. The move will entail transferring ownership of the complete UD Trucks business globally from the Volvo Group to Isuzu Motors in order to accelerate growth by leveraging greater volumes and complementary capabilities.

The enterprise value for the complete UD Trucks business is JPY 250 billion (approx. NZ$3.5 billion) and will be subject to the final scope of the business transferred and Isuzu Motor’s due diligence. The transaction is expected to increase Volvo Group’s net cash position by approximately the same amount.

"The Volvo Group and Isuzu Motors have a well-established relationship on medium-duty trucks in Japan based on mutual respect, shared values and win-win spirit. We see great potential to extend our cooperation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners," says Martin Lundstedt, president and CEO of the Volvo Group.

"Our UD Trucks colleagues have done a great job to improve performance in recent years and the alliance opens up a great opportunity to continue the successful journey." "Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two groups," adds Masanori Katayama, president and representative director of Isuzu Motors Limited.

"We intend to derive the full value from each other’s different specialties across product and geographical strongholds. Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution."

The Memorandum of Understanding is non-binding. The next steps will be finalising the scope of the business to be transferred, due diligence by Isuzu Motors and negotiations of binding agreements. Signing of binding agreements is expected by mid-2020 and closing of the transaction is expected by the end of 2020. All potential transactions will be subject to regulatory and other approvals.

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