Volvo to Sell Equipment Rental Unit for $1.1 billion
Volvo Group said it will sell its North American equipment rental subsidiary for $1.1 billion to equity firm Platinum Equity.
Volvo said it is selling its construction rental business, Volvo Rents, to focus on the core business and that it expects the deal to close in the first quarter of 2014.
“We looked at different alternatives to grow Volvo Rents’ business and concluded that the best alternative is to sell the operation to another owner. Volvo Rents’ business does not have a sufficiently strong connection with [Volvo Group’s] core operation to motivate continued ownership,” Volvo Group CEO Olof Persson said in a statement.
Volvo Rents had an operating loss of 47 million kroner ($8.67 million) in the first nine months of 2012 and has about 2,100 employees, according to its parent company.
Volvo Construction Equipment, which just purchased the truck subsidiary of Terex Corp. for $160 million, will continue to sell products to Volvo Rents under the new owner.
“The sale value looks good for a loss-making business,” David Arnold of Barclays Plc told Bloomberg News. “The cash inflow should allow the company to maintain the dividend, albeit in a low-quality fashion.”
