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Published: 30 October 2020

Volvo Group and Isuzu Motors Sign Final Agreements to form Strategic Alliance

The Volvo Group and Isuzu Motors will establish a Joint Alliance Office, with facilities both in Japan
and Sweden, which will be overseen by an Alliance Board comprising the Isuzu Motors President,
the Volvo Group CEO and other key executives from the two groups.

There is great complementarity between the Volvo Group and Isuzu Motors from both a geographical and product line perspective. The two companies have signed an Alliance Framework Agreement for a minimum duration of 20 years, to take up the possibilities and challenges of the logistics industry of  the future, maximizing value and benefits for customers as well as for society.  “I have high expectations on this strategic alliance, which will make Volvo and Isuzu Motors even
more competitive within their respective markets and segments. This is an opportunity to share technology investments and also to help each other grow. I am confident that UD Trucks will become a bridge between the Volvo Group and Isuzu Motors and that the strategic alliance will create the conditions to continue to develop UD Trucks to a new level within Isuzu Motors. I also want to express my pride at how the UD Trucks team has been able to serve customers and continue to improve financial performance also during this unprecedented period, characterized by the COVID-19  pandemic. The Volvo Group will continue to support UD Trucks, and participate in the Asian markets  through this alliance,” says Martin Lundstedt, President and CEO of the Volvo Group.

“This is a very exciting day. We have signed the strategic alliance agreement with the Volvo Group. The difficult and unforeseeable COVID-19 situation has made the strategic alliance even more valuable and has built a solid, trustful relationship between Isuzu and the Volvo Group. This longterm partnership will span across products, technologies and regions, and actively contribute to  service improvements and strengthened customer satisfaction as well as supporting the logistics industry. I am fortunate to have UD Trucks joining the Isuzu Group. UD Trucks will play an important role of the strategic alliance for efficient and effective collaboration between Isuzu Motors and the Volvo Group,” says Masanori Katayama, President and Representative Director of Isuzu Motors Limited.

The agreed purchase price on a cash and debt free basis, enterprise value, for UD Trucks is JPY 243 billion (approx. SEK 20 billion) to be paid to Volvo at the closing of the transaction. Furthermore, the agreement includes an earnout, in which an additional amount up to JPY 15 billion (approx. SEK 1.2 billion) is to be paid subject to the performance of UD Trucks during the years 2021-2023. UD Trucks’ revenues for the last 12 months (July 2019-June 2020) amounted to JPY 278 billion (approx. SEK 23
billion). The business had a marginally positive impact on the Volvo Group’s operating income in the same period. At the time of closing, the transaction is expected to result in a positive impact on the Volvo Group’s operating income of approximately SEK 2 billion and increase the Volvo Group’s net cash position in the Industrial operation by approximately SEK 20 billion. Closing is expected during the first half of 2021. The transaction is subject to certain conditions, including approval from
regulatory authorities.