Volvo, Renault Expected to Announce Merger : Autos: Analysts say the firms’ markets are complementary.
Volvo and Renault are expected to announce today that they will merge, creating the world’s sixth-largest auto maker.
The two companies have cooperated on purchasing and development for more than 3 1/2 years and own large portions of each other’s stock. A merger was expected.
The companies scheduled a news conference for this afternoon in Paris. Several newspapers in France and Sweden reported Sunday that the merger was imminent.
Swedish television quoted sources close to President Francois Mitterrand of France as saying the announcement awaited only final clearance from the French government, which owns Renault.
Executives for Volvo declined comment and a spokesman for Renault could not be reached.
Analysts said the companies have complementary products and markets.
Stockholm-based Volvo’s sedans and station wagons, known for their boxy style and safety, are aimed at a narrow, generally affluent market and are popular in northern Europe.
Renault, meanwhile, makes a broader range of automobiles with mass market appeal and is stronger than Volvo in southern Europe.
Volvo’s top North American executive, Mats Ola Palm, said Sunday he could not confirm a merger would be announced.
But he said consumers eventually would see lower costs from savings in a merger.
About 80,000 of Volvo’s 320,000 annual unit sales are in the United States and Canada.
The combined Volvo and Renault would have annual revenue near $38 billion and sell just over 2 million cars per year. General Motors, Ford, Toyota, Volkswagen and Nissan would be larger.
Renault is one of the healthiest auto makers in Europe, earning $1 billion on $26.7 billion in 1992 sales.
Volvo lost $435 million last year but earned $5.59 million during the first half of this year.
Renault would own 65% of the entity but Volvo would retain veto power on major strategic decisions, according to news accounts.
The French newspaper Liberation and Swedish newspaper Aftonbladet reported that the combined companies would probably be based in a third country, possibly the Netherlands.
Aftonbladet said Volvo’s chairman, Pehr G. Gyllenhammar, would be chairman of the new company, while Renault chairman Louis Schweitzer, serving as executive director, would have majority ownership control.
