French carmaker Renault today said it has raised €1.48 billion ($1.93 billion) through the sale of its remaining stake in truck maker Volvo AB, after being the Swedish company's largest shareholder for 11 years.
Renault, which sold 14.9 per cent in Volvo in 2010 for €3 billion, yesterday sold 138.6 million Volvo class A shares or 6.5 per cent stake, at 92.25 kronor per share, which is a 3.80per cent discount to yesterday's closing price of 95.90 kronor.
Renault, which had debt of €818 million as on 30 June, said that the proceeds from the sale will be used to reduce debt and invest in France, Russia and China.
''The funds raised through this sale will strengthen the financial stability of the Renault group and will be allocated in priority to the reduction of the net automotive debt of the Renault group, investments decided within the Plan, notably in France that will represent around 40 per cent of industrial investments of the Group in 2013, strategic international investments of the Group, notably in Russia and China, which will constitute new opportunities for growth that will strengthen the Group.
It added that these investments are ''required for the preparation of the group's future in order to follow the rejuvenation programme, strengthen the competitiveness of its European plants and foster the international expansion.
The French government, which owns a 15-per cent stake in Renault, said that 45 per cent of the proceeds will be used to reinforce Renault's industrial presence in France.
Renault and Volvo had agreed to merge in 1993, but the Gothenburg, Sweden-based company's shareholder torpedoed the deal fearing that the merged company will come under French government control.
The Volvo stake sale comes on the same day that Renault and its Japanese partner Nissan Motor agreed to acquire a controlling stake in struggling Russian auto maker OAO AvtoVaz, for $742 million.