Volvo Cars have agreed to buy out parent company Zhejiang Geely Holding (GEELY.UL) from their joint ventures in China, potentially boosting the Swedish automaker’s valuation ahead of a planned share sale, Reuters reports.
According to a statement from the Swedish company’s CEO Hakan Samuelsson, the deal will make Volvo the first major foreign automaker to gain full control over its Chinese operations.
Volvo said in a statement that under the agreement, the carmaker will also buy an additional 50 percent of shares in Daqing Volvo Car Manufacturing Co. and Shanghai Volvo Car Research and Development Co.
After lifting the limit for electric-vehicle manufacturers in 2018, China is set to remove the 50 percent cap on foreign automakers’ investments in joint ventures that make gasoline-powered cars in 2022,
According to Volvo, the transaction will be completed in two steps and is expected to be formally completed in 2023. The transaction’s first step will start next year when the joint venture cap is lifted.