LONDON - Volvo Group has agreed to sell its construction machinery rental business to the California-based private-equity firm Platinum Equity for 7.2 billion Swedish kronor.
The Swedish truck, bus and construction equipment maker said that the deal, valued at about $1.1 billion, would have a negative impact on its fourth-quarter operating income of about 1.5 billion Swedish kronor, but would reduce the debt within its industrial operation segment.
A prerequisite for the deal to be completed is that Platinum Equity finance the transaction though a debt offering. Volvo Group would continue to supply its products to the business following the transaction.
“We looked at different alternatives to grow Volvo Rents’ business and concluded that the best alternative is to sell the operation to another owner,†said Olof Persson, Volvo Group president and chief executive. “Volvo Rents’ business does not have a sufficiently strong connection with the Group’s core operation to motivate continued ownership.â€
The transaction, which is subject to regulatory approval, is expected to close in the first quarter of 2014.
Volvo Rents was formed in 2001 and offers rentals of machines used in the construction and engineering industry. It employs about 2,100 people in the United States and Canada.
In the first nine months of this year, Volvo Rents had net sales of 3.1 billion Swedish kronor, but posted an operating loss of 47 million Swedish kronor.
The transaction expands Platinum’s portfolio of equipment rental providers, which include Maxim Crane Works and Nesco, which primarily provides equipment to the power industry.
