Volvo To Make Offer For Bilia Construction Equipment Operations

STOCKHOLM March 13, 2003; Dow Jones reported that Swedish automotive group AB Volvo Thursday said it intends to make a public offer for the truck and construction equipment operations of Bilia AB .

Bilia plans to spin its truck and equipment operations out into a separate company, to be known as Kommersiella Fordon AB, or KFAB. Shareholders of Bilia will get one share in the new company for each share they own of Bilia.

Volvo, which owns 43% of Bilia, said it will then offer to exchange its shares in Bilia for other shareholders' shares in KFAB. Its plan is to offer three shares in Bilia for four shares in KFAB, it said.

Volvo said the proposed exchange ratio was negotiated with Bilia's board of directors, which is proposing the division of the company.

Volvo said the deal would allow it to focus its operations and should boost revenues and reduce costs. It said the proposed acquisition should have a marginally positive effect on its earnings per share.

If the projected offer is fully accepted, Volvo's stake in Bilia will fall to roughly 132,000 shares, or about 0.5% of the capital and voting rights in the company that remains following the spinoff of the truck and construction- equipment operations.

Volvo said KFAB's shares will be listed for trading if it doesn't manage to get more than 90% of the shares and voting rights in the company.

Company Web site: http://www.volvotrucks.com