Clark Equipment, AB Volvo Announce Merger
BUCHANAN, Mich. (AP) _ Clark Equipment Co. and AB Volvo of Sweden announced Wednesday the formation of a company that would merge the construction machinery operations of their subsidiaries.
The subsidiaries, Clark Michigan Co. and Volvo BM AB, will form a single entity based in the Netherlands, but would initially operate from existing facilities and headquarters in both the United States and Sweden, Clark said in a statement.
Clark and Volvo directors on Wednesday approved a letter of intent to form the new company, which is expected to begin operations after the legal formation in Netherlands, including the registration of the company name and the approval of various government agencies in the respective countries.
″The formation of this joint venture represents another major step in the strategy to create a new viable worldwide construction and mining machinery company,″ Clark Equipment Chairman James Rinehart said in the statement.
The new company will offer an extensive line of front-end loaders, wheeled dozers and rigid as well as articulated off-highway dump trucks, log skidders and heavy-duty articulated backhoe loaders, the statement said.
The companies each would own 50 percent of the new business, which will employ 7,500 workers and reach an estimated $800 million in sales revenues this year, making it a leading producer of off-highway trucks and wheel loaders worldwide.
″The construction machinery business is a worldwide business,″ said AB Volvo President Hakan Frisinger. ″The formation of this new company will position us to compete more effectively in a world market.″
Currently, Caterpillar Tractor Co. and Komatsu Ltd. of Japan dominate the world market for large construction machinery, said Clark spokeswoman Pat Whalen.
The first step in the joint venture was the November 1983 creation of Clark Michigan, followed by the acquisition in January of Euclid Inc. from Daimler- Benz AG in a stock and cash transaction valued at between $34 million and $39 million.
The two companies swapped 10 percent of their stock in April, Ms. Whalen said.
Eric Johanson, managing director of Volvo BM AB, will become the managing director of the new company, the statement said.
Clark Equipment Co., with sales of more than $1 billion in 1984, is a worldwide producer of construction machinery, material-handling equipment, axles and transmissions, and also provides financial and management services.
AB Volvo, with sales of $9.6 billion in 1984, is a major manufacturer of automotive products, including automotives, on-highways trucks, buses and construction machinery.