PARIS ― Swedish truck builder Volvo has announced the cancellation of a planned sale of Renault Trucks Defense and other military vehicle builders due to low bids.
“Our Governmental Sales operation has a positive development and a strong order book,” Jan Gurander, deputy chief executive and chief finance officer at Volvo Group, said in a statement. “We have previously announced our intention to divest this business, but the offers we have received do not reflect its value. We have therefore decided to discontinue the divestment process.”
That cancellation of the closely watched competition came as “a great surprise,” an industry executive said.
The Volvo Group Governmental Sales unit includes Acmat, Mack Defense in the U.S., Panhard, RTD and Volvo Defense. These units make up the military sales business, which employs more than 1,300 staff.
RTD, the lead unit, posted 2015 sales of some €500 million (U.S. $590 million) and had a target to double its annual sales by 2018 or 2019.
According to two executives, the tender had narrowed down to two bidders: KNDS, a joint venture between Nexter of France and privately owned German company Krauss-Maffei Wegmann; and Belgian competitor CMI. The former had offered between €300 million and €400 million, while the latter had bid some €400 million.
Those bids were lower than Volvo’s valuation of €500-700 million, the executives said. Rothschild acted as adviser to Volvo on the planned sale.
There had been two bidders, but their offers “did not mirror the value we think is in the company,” Volvo Group spokesman Henry Sténson told Defense News. Volvo had gone through the process and made an estimation of fair value, which the two bidders failed to meet.
Volvo would now keep the unit and continue with the operation, he said, declining to give the valuation, bids or names of the two bidders.
Nexter takes full note of the cancellation and will continue to develop its partnership with RTD, a Nexter spokesperson told Defense News.
Nexter and RTD are key partners on the Scorpion modernization program for the French Army, notably the Griffon six-wheel multirole troop carrier and six-wheel Jaguar combat vehicle. Thales is also a Scorpion partner, specializing in on-board electronic systems.
A key factor for RTD will be an expected tender for a light multirole reconnaissance vehicle, dubbed VMBR light, also part of the Scorpion program, an executive said.
The cancellation called into question awarding RTD a contract, expected to be worth €1 billion, as there was still uncertainty hanging over the company, the executive added.
