Volvo Group has agreed to sell its North American rental business Volvo Rents to California-based private equity firm Platinum Equity for approximately $1.1bn.
The transaction is to include Volvo Rents operations in the United States, Canada and Puerto Rico. Volvo Rents operations in other parts of the world, such as Europe, the Middle East and Asia, will not form part of the deal.
The decision to sell Volvo Rents has been made as part of Volvo’s overarching restructuring strategy, which is being conducted in a bid to boost the manufacturer’s profitability. Volvo expects the $1.1bn sale to positively impact its cash flow by the same amount.
“We looked at different alternatives to grow Volvo Rents’ business and concluded that the best alternative is to sell the operation to another owner,” said Volvo Group president and CEO Olof Persson. “Volvo Rents’ business does not have a sufficiently strong connection with the group’s core operation to motivate continued ownership,” he added.
Volvo expects the deal to be closed in the first quarter of 2014, providing that Platinum Equity successfully completes a debt offering to finance the acquisition.
The Swedish heavy equipment manufacturer has stated that all Volvo Rents employees will remain with the company as it is sold. Customers will not be affected by the transaction and Volvo Construction Equipment will continue to sell products to Volvo Rents under the new ownership.
