Volvo Construction Equipment last week said it has received all necessary regulatory approvals for the earlier announced equity investment of 70 percent in Shandong Lingong Construction Machinery Co., Ltd., a major construction machinery manufacturer in China, and the deal is now closed.
“We are delighted to move forward in our partnership with Lingong,” said Tony Helsham, president and CEO of Volvo CE. “Lingong’s management, brand, R&D center, manufacturing base, distribution and suppliers are important elements in Volvo CE's growth strategy.”
“This cooperation secures Lingong’s future,” said Wang Zhizhong, chairman of Lingong. “Volvo’s advanced technology, management and global distribution will be key factors in the development of our company.”
Volvo CE has invested RMB 327.5 million (approximately U.S. $42 million) in exchange for 70 percent of the equity in Lingong. In 2005 Lingong’s operating income was RMB 10.2 million on revenue of RMB 2 billion. The deal has no material impact on Volvo’s financial position.
Headquartered in Brussels, Belgium, Volvo CE develops, produces and markets equipment for construction and related industries. Its products include a full range of wheel loaders, hydraulic crawler and wheeled excavators, articulated haulers, motor graders, backhoe loaders, compact wheel loaders, compact excavators and skid-steer loaders.
Volvo CE started its Chinese hydraulic excavator manufacturing facility in April 2003 and has so far invested U.S. $24 million into this Shanghai-located operation. The company employs around 250 people in China.
Founded in 1972, Shandong Lingong Construction Machinery Co. is a major Chinese construction machinery manufacturer with around 1,800 employees. Lingong develops, manufactures and markets a broad range of products including wheel loaders, excavators, backhoe loaders and road rollers. Products are distributed across China and exported to Australia, the Middle East, Malaysia and Mongolia.