Volvo OKs Renault Unit Purchase
GOTEBORG, Sweden (AP) _ Volvo shareholders approved the purchase of Renault’s truck division Wednesday even as the company announced a sharp decline in first-quarter earnings.
Shareholders approved without debate Volvo’s plans to buy Renault’s RVI truck division and its U.S. subsidiary Mack Trucks Inc., spokesman Mats Edenborg said. The shareholder approval of the $1.6 billion deal came during Volvo’s two-hour annual meeting and was largely expected.
The French automaker will get a 15 percent stake in the Swedish automaker, making it Volvo’s biggest shareholder under the deal. Renault will buy another 5 percent of Volvo’s shares on the open market and hold its stake for at least three years, the companies said.
The deal still needs approval from U.S. and European antitrust authorities.
In its earnings report, Volvo said its net income was 1.27 billion kronor, or $143.0 million, in the three months ended March 31 compared with 27.56 billion kronor a year earlier.
The results a year ago included a capital gain of 27 billion kronor from the sale of Volvo’s car division to Ford Motor Co.
Net sales rose 13 percent to 30.55 billion kronor, or $3.44 billion, from 27.07 billion kronor a year earlier. Operating profit also rose by 13 percent.
``During the second quarter, we foresee continuing very high demand in Europe and increasing activity in Asia primarily, but also South America,″ chief executive Leif Johansson said in a statement. ``We have an interesting year ahead of us.″
About the European Union’s decision last month to block Volvo’s $6.9 billion merger with rival Swedish truck and bus maker Scania, Johansson said ``we lost some momentum″ but added ``the damage was limited.″