Volvo Cars, the Swedish automaker, experienced a significant drop in its share price as its majority shareholder, China’s Geely, sold a portion of its stake at a considerable discount to the previous day’s closing price. The sale of the 3.4% stake resulted in a 14% decrease in Volvo Cars’ shares, causing concern among investors.
Geely, which launched a placing of 100 million Volvo Cars shares, confirmed that the shares were sold at approximately 37 Swedish crowns each, totaling $350 million. This price represented a deep discount compared to the stock’s previous closing price of 40.84 crowns.
Following the stake sale, Geely now holds a 78.7% stake in Volvo Cars, leaving some room for the automaker to increase its free float and diversify its shareholder base. However, the proceeds from the share sale did not go to Volvo Cars but were intended to support business development within the Geely group.
As a result of the news, Volvo Cars’ shares experienced a 10.2% decline, reaching 36.66 crowns during trading hours. The share price briefly plummeted to 35.25 crowns, reflecting the uncertainty surrounding the sale.
Goldman Sachs, BNP Paribas, and SEB were the bookrunners for this transaction, according to Geely. Moreover, Geely Holding, the parent company, agreed to a lock-up period of 90 days for its remaining shares, which helps maintain stability in the market.
While the sale of Geely’s stake in Volvo Cars may raise concerns, the intention to diversify the shareholder base could lead to positive developments and potentially contribute to the future growth of the company. Time will tell how this strategic move influences Volvo Cars and its overall performance in the market.
1. How much of Volvo Cars did Geely sell?
Geely sold a 3.4% stake in Volvo Cars.
2. What was the selling price for the Volvo Cars shares?
The shares were sold at approximately 37 Swedish crowns each.
3. Why did Geely sell its stake in Volvo Cars?
Geely sold a portion of its stake to increase the free float and broaden the shareholder base while supporting business development within the Geely group.
4. What were the bookrunners for the transaction?
Goldman Sachs, BNP Paribas, and SEB served as the bookrunners for the share sale.
5. What is the lock-up period for Geely’s remaining shares?
Geely Holding committed to a 90-day lock-up period for its remaining shares, subject to customary exceptions and waivers by the bookrunners.