Volvo Group and Isuzu Motors form a strategic alliance within commercial vehicles by signing a non-binding Memorandum of Understanding (MoU). The partnership entails transferring the ownership of the complete UD Trucks business globally from the Volvo Group to Isuzu Motors with a motive of accelerating its growth by leveraging greater volumes and complementary capabilities. With an intend to capture opportunities while the CV industry is undergoing transformation, both the companies plan to create stronger, combined heavy-duty truck business for Isuzu Motors and UD Trucks in Japan and across international markets.

The enterprise value of JPY 250 billion (approx. SEK 22 billion as per the end of November 2019) for the complete UD Trucks business, will be subject to the final scope of the business transferred and Isuzu Motor’s due diligence. The transaction is said to result in a positive impact on the Volvo Group’s operating income of approximately SEK 2 billion and increase its net cash position by approximately SEK 22 billion. Talking about the partnership, Martin Lundstedt, President and CEO, Volvo Group said, “Our UD Trucks colleagues have done a great job to improve performance in recent years and the alliance opens up a great opportunity to continue the successful journey.” Masanori Katayama, President and Representative Director, Isuzu Motors Limited added, “Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution.”

As per the sources, signing of binding agreements is expected by mid-2020 and closing of the transaction is expected by the end of 2020. All potential transactions will be subject to regulatory and other approvals.