Volvo Cars experienced a significant drop in its shares, falling approximately 13% to a historic low, following the sale of a portion of its stake by its major shareholder, Geely.
China’s largest privately owned carmaker decided to sell 100 million Volvo Cars shares at a discounted price. The aim was to increase the free float and thereby enhance the Swedish company’s overall value.
Jim Rowan, CEO of Volvo Cars, emphasized that the move will benefit both existing and new investors. Geely, which acquired Volvo Cars in 2010, disclosed that it raised around $350 million from the sale, with the shares sold at around 37 SEK each. This is a nearly 10% discount to the previous day’s closing price of 40.84.
The sale resulted in a 4% reduction in Geely’s stake in Volvo Cars, leaving them with an expected 78.7% stake.
Despite the intention to bolster the value of Volvo Cars’ stock, which had already experienced a nearly 23% decline year-to-date, the move seemed to have an immediate negative impact. The company’s shares were down 11% on Friday, November 17.
Source: weny.com
