Volvo to Buy Mack in $1.5 Billion Deal

Volvo AB will become the owner of Mack Trucks under a deal announced today in Stockholm, Sweden.

According to Bloomberg News Service, the Swedish truck maker has agreed to pay $1.5 billion in stock – about 15% of its shares – for the truck division of Renault SA, which includes RVI in Europe and Mack in the United States.

Volvo's search for a truck-making partner has been the topic of speculation since the European Union rejected in March its planned $6.9 billion takeover of Swedish rival Scania.

Volvo Trucks North America claims about 11% and Mack Trucks about 13% of the U.S. Class 8 truck market.

As part of the deal, Renault agreed to buy an additional 5% of Volvo's stock, which would give it a total holding of 20% in the company. It would also get two seats on the Volvo board, one of which would go to Renault Chief Executive Louis Schweitzer.

The combined companies will become biggest truck maker in Europe. The acquisition would create the second-largest commercial vehicle manufacturer in the United States behind Freightliner Corp. and No. 2 in the world behind DaimlerChrysler. It would establish the third-largest maker of heavy-duty diesel engines in the world, Bloomberg reported.