Renault to Sell Volvo Truck Stake

Renault SA will divest its remaining 138.6 million shares in Swedish truckmaker AB Volvo in a private sale on Thursday to raise 13.3 billion kronor (€1.5 billion) of cash. The stake represents 6.5% of Volvo's equity and 17.2% of its voting rights.

Renault says it will use the proceeds to reduce its €818 million automotive net debt load and to invest in France, China and Russia. The carmaker's finances have suffered as its European sales tumbled 18% in the first 10 months of 2012.

Renault is likely to direct some of the proceeds to the 11.3 billion-ruble (€284 million) investment Renault unveiled today as part of a deal with alliance partner Nissan and a Moscow-based firm to take control of Russia's largest carmaker AvtoVAZ.

The French government, which owns 15% of Renault, says 45% of the funds raised by the Volvo stock sale will be spent to "reinforce" the company's industrial presence in France. It is unclear whether that amount will be part of the €2 billion Renault has already promised to invest in the country between 2011 and 2013.

Renault has been Volvo's largest shareholder since it acquired a 20% stake in 2001 by selling its own heavy-truck business to the Swedish company. Renault sold a 14.9% Volvo stake for €3 billion in 2010.