Swedish truck maker Volvo said it would take over Nissan Diesel Motor for $1.1 billion, seeking further growth in Asia and to capitalize on the Japanese truck maker's expertise.
Volvo, the world's No. 2 truck maker and which currently owns 19% of Nissan Diesel, said it would offer 540 yen in cash for all the shares it does not own and put the value of the tender offer at 7.5 billion Swedish crowns.
That is a 22% premium to Monday's closing price and a 32% premium to Nissan Diesel's average price over the past three months. Shares in the Japanese truck maker were untraded due to a flood of buy orders in early Tuesday trade.
"Nissan Diesel's products and know-how represent a valuable complement to the Group's truck business," Volvo Chief Executive Leif Johansson said in a statement. "Nissan Diesel has a solid position in Japan and the rest of Asia where the Volvo Group foresees substantial growth potential," he said.
Tokyo Stock Exchange placed the truck maker on "administrative watch" after Nissan Diesel said Volvo planned to make it a wholly-owned unit and it would be delisted. The two companies plan a news conference at 3.00 p.m. local time in Tokyo.
Volvo said it would benefit from Nissan Diesel's expertise in medium-heavy trucks and hybrid technology. Joint studies had shown the two firms would benefit from combined procurement, product development and working together on engines, it said.
Volvo became the top shareholder in Nissan Diesel in March last year, replacing Nissan Motor.
Last month, China's Dongfeng Motor Group said it was in talks to bring Volvo into an existing vehicle venture with Nissan Motor, under which Volvo would replace Nissan as Dongfeng's partner in making heavy and medium-duty commercial vehicles.