Isuzu Motors has acquired UD Trucks from the Volvo Group for $2.19 billion, on a cash and debt free basis, as a part of the strategic alliance between the commercial vehicles departments of the two groups. The strategic alliance, aiming to capture opportunities in the ongoing industry transformation, will now also become operational.
The transaction is estimated to have a positive impact on the Volvo Group’s operating income in the second quarter 2021 of close to $229 million and increase Volvo Group’s net cash position by approximately $2.1 billion.
The alliance between the Swedish and Japanese companies aims to build a “long-term and robust relationship,” according to Volvo. The OEMs are forming a technology partnership intended to leverage each company’s areas of expertise within both well-known and new technologies and creating a more extensive volume base to support investments for world-class technology.
Volvo and Isuzu will establish a Joint Alliance Office, with facilities both in Japan and Sweden, which will be overseen by an Alliance Board comprising the Isuzu Motors President, the Volvo Group CEO and other key executives from the two groups. The Alliance – which will have a minimum duration of 20 years – is intended to address possibilities and challenges of the logistics industry of the future.
The Alliance is now entering the next phase with focuses on:
- Creating the best long-term conditions for a stronger heavy-duty truck business for now Isuzu-owned UD Trucks and Isuzu Motors in Japan across international markets.
- Exploring further opportunities for even broader and deeper collaboration within the commercial vehicle businesses across geographical areas and product lines for future urban logistics solutions.
- Exploring cooperation in the areas of purchasing and logistics, leveraging common technology, as well as the geographical footprint complementarity and volume expansion.
If UD Trucks performs well, Isuzu is to pay Volvo Trucks up to $135.5 million during 2021-2023 as an earnout subject.
