It is a coup de theatre. Volvo Group has decided to put an end to the process of selling the business, Governmental Sales, announced on Tuesday that the group, in a press release. Why ? Due to the price offered by the only two buyers who were declared to be under the watchful eye of the French State. France had deterred the u.s. group, Rheinmetall, and the investment funds to make an offer in relation to the strategic weight of Renault Trucks Defense (RTD) in the equipment of the French army. Accordingly, Volvo Group finally considered that the offers received did not reflect the value” of this activity. However, the signing of the sale was expected in November and the closing in the first half of 2018.
“Volvo Group Governmental Sales is developing positively and has built up a backlog result. We announced our intention to sell this activity, but the bids received did not reflect his value. We have therefore decided to put an end to the process of transfer,” explained the number two in the Volvo Group, Jan Gurander, also chief financial officer.
A decision that the number two of the group came himself to announce on Tuesday in Paris to the ministry of the Armed forces. What has completely surprised Krauss-Maffei Nexter Defense Systems (KNDS) and the belgian group CMI, the two buyers who wanted to offer Volvo Group Governmental Sales. The sales of this activity represent approximately 1.5% of the truck manufacturer. It has about 1,300 people, mainly based in France, designs and manufactures vehicles specific to governments. The three French brands of this activity (RTD, Acmat and Panhard provide approximately 90% of the platforms, armored now in service with the French army. And the weight of the program Scorpion in the backlog of RTD would weigh 70% of the value of RTD.
Offers below € 500 million.
In a first time, the Volvo Group was waiting for this sale 500 million euros approximately. But Rothschild, the bank board, is being touted to be able to do much better and win a jackpot of 700 million euros. But at the end of the due diligence (opening of accounts), KNDS and CMI had found “delirious,” the business plan devised by Volvo and its bank board. “This business plan, nobody believes in it”, had explained to The Tribune, a good connoisseur of the folder. Thus, according to several sources, CMI would have proposed a sum of between 400 and 410 million euros, whereas KNDS was finally tabled an offer very recently between 300 and 350 million euros. Too little for Volvo, who preferred to throw in the towel.
Since this summer, the Swedish group had been very embarrassed by the turn of this operation and by the attitude of KNDS, the favourite of France, which did not offer until there is very little time. The former office of the minister of Defence had allowed the tip of the lips to the MIC to participate in the operation but had been forbidden to Rheinmetall and investment fund to launch under the threat of a veto from France in case of success. Moreover, according to our information, France was very rise against Volvo Group as a result of this operation.