Volvo’s stake in Polestar will shrink from 48 to 18%

Volvo Cars will reduce its stake in Polestar to 18%. To this end, the Swedish firm aims to sell shares worth 9.5 billion crowns (± €850 million) to its shareholders.

In other words, first and foremost, it is to the mother company, Geely. The transaction is scheduled to be finalized this spring. The fact that Volvo Cars intends to strongly diminish its financial participation in the electric car brand Polestar, which it holds jointly with Geely, was already made public at the beginning of the month.

Selling almost two-thirds

Now, things are getting concrete. Volvo Cars plans to sell 62.7% of its shares in Polestar to its shareholders. After completing the planned transaction, Volvo Cars’ stake will amount to 18% of the total outstanding Polestar shares, according to an accompanying press release. It currently holds 48%. So, the Swedes aren’t completely withdrawing for Polestar, and that’s what Volvo CEO Jim Rowan confirmed a few weeks ago.

According to Volvo, the distribution of the shares to the company’s shareholders will be realized through a 2:1 share split, followed by an automatic share redemption process.

Shareholders can choose whether they want to become direct owners of Polestar or whether they want to sell their redemption shares and receive cash. The deadline for the planned share split is 12 April. Before this, all official approvals must be obtained by 5 April at the latest.

Close ties will remain

Volvo’s largest shareholder – Geely – expressly supports the transaction. Geely Sweden Holdings AB holds 78.7% of the shares and votes in Volvo Cars and has already agreed to vote in favor of the distribution at this year’s Annual General Meeting on 26 March and to opt for the ownership option.

With this step, Geely will effectively become Polestar’s new major shareholder. It has already confirmed its intention to continue to support Polestar operationally and financially as a precautionary measure.

“Polestar will thus become a completely independent part of the Geely Group,” a spokeswoman for Polestar explained in an e-mail statement. It is the first time Geely Holding has held a direct stake in Polestar. “Polestar now joins Volvo, Lotus, Zeekr, and all the other Geely brands on an equal footing as a truly independent member of the Geely Group,” she adds.

Meanwhile, Volvo emphasizes that the close operational ties between Volvo and Polestar will continue in research and development, production, customer service, and sales “to benefit both companies”. The Swedes do not want to provide any further funds but are still financially linked to Polestar via an outstanding convertible loan totaling 1 billion US dollars.

Geely boss Li Shufu is personally involved

It is important to know that in the current shareholder structure, in addition to Volvo (with its 48%), the investment company PSD Investment has a 39% stake in Polestar. PSD is a personal investment company of Geely CEO Li Shufu.

Contrary to popular belief that Geely is already the owner of Polestar, the shares are owned by the CEO. Geely Holding Sweden, the biggest shareholder in Volvo Cars, does not yet have a direct stake in Polestar.

In Belgium, Managing Director for Polestar Belux, Lies Eeckman, comments: “This transaction marks a crucial moment for Polestar, guiding us toward a larger autonomy inside the innovative, worldwide Geely ecosystem.”

“Our strategic and operational relationship with Volvo Cars will remain as it still owns 18% of the shares. Our current and future customers will thus continue to benefit from premium service and maintenance,” she adds.

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