Volvo and Mitsubishi initiate ownership cooperation and form strategic alliance

VOLVO AND MITSUBISHI INITIATE OWNERSHIP COOPERATION AND FORM STRATEGIC ALLIANCE FOR TRUCKS AND BUSES Volvo and Mitsubishi Motors have signed an agreement about ownership cooperation and a letter of intent covering the formation of a strategic alliance for trucks and buses. Volvo is initially acquiring a 5% interest in Mitsubishi Motors and Mitsubishi Motors is acquiring a 5% holding in Volvo. In a first step Volvo will acquire 5% of the shares in Mitsubishi Motors through a special new issue for JPY 29 billion (SEK 2.3 billion). In turn, Mitsubishi Motors has announced its intention to successively acquire up to 5% of the share in Volvo on the market through the year 2002. Not later than April 1, 2000, Mitsubishi Motors will form a separate division for its combined truck and bus operations. This division will be incorporated as a subsidiary of Mitsubishi Motors during the year 2001. In accordance with the signed letter of intent, Volvo intends to acquire 19.9% of the shares in this truck and bus company in conjunction with the incorporation. Volvo will appoint one or two non-management board members in this new subsidiary. Consequently, Mitsubishi Motors will appoint one or two non- management board members in Volvo´s truck and bus subsidiaries. Pursuant to the letter of intent, Volvo and Mitsubishi Motors will also form a strategic alliance involving market, product and industrial cooperation in the truck and bus segments. The agreement will strengthen and expand the already existing cooperation between the companies on trucks and enhance it to include also buses. An alliance agreement with regard to these cooperations is expected to be signed before the end of this year. "The agreement to acquire 5% of Mitsubishi and the strategic alliance opens up possibilities for further cooperation with Mitsubishi. Volvo´s costs for product development and tools in our common medium duty project can be reduced by SEK 500-1,000 M", says Volvo´s CEO Leif Johansson. "Volvo has long held strong positions in trucks and buses in Europe, North America and South America. As a consequence of the agreement with Mitsubishi, we are now substantially strengthening our position in Asia and we are accomplishing this with a partner with competitive volumes in both light and medium duty trucks and with whom we have enjoyed good cooperation for many years. We now see good opportunities to gain from future cooperation with Mitsubishi also on buses", says Leif Johansson. Each year, Mitsubishi delivers approximately 150,000 light trucks, 30,000 medium-heavy trucks mainly in Asia, Europe and North America, and 20,000 heavy trucks, mostly in Asia. The total number of delivered Mitsubishi buses amounts to approximately 7,500 annually, of which approximately 2,000 heavy buses. Volvo delivered a total of 83,280 medium heavy and heavy trucks during 1998, mainly in Europe, North America and South America. In the same year, Volvo delivered a total of 10,200 heavy buses. In a joint statement, Leif Johansson and Mitsubishi Motors' CEO Mr Katsuhiko Kawasoe, said: "Volvo and Mitsubishi Motors have been cooperating within such important areas as the next-generation medium-heavy truck, future technologies, common components and distribution. This agreement strengthens this cooperation further and creates possibilities for more cooperative ventures since we can now benefit from each other's know-how on a broader and more efficient scale. We are convinced that this alliance will facilitate a stronger product offering to both companies' customers and dealers." October 8, 1999 For further information, please contact: Mats Edenborg, AB Volvo, phone +46-31-59 11 26, mobile +46-708-59 11 26 Stefan Lorentzson, AB Volvo, phone +46-31-59 10 90, mobile +46-705-59 10 90 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/10/08/19991008BIT00030/bit0001.doc http://www.bit.se/bitonline/1999/10/08/19991008BIT00030/bit0002.pdf