(Reuters) – Volvo Cars said on Friday it plans to distribute 62.7% of its stake worth 9.5 billion crowns ($920.17 million) in Swedish electric vehicle manufacturer Polestar Automotive Holding to its own shareholders.
After completion of the proposed distribution, Sweden-based Volvo Cars said it will retain an 18% stake in Polestar.
The heavy involvement by Sweden-listed Volvo Cars in Polestar, where it owns around 48% of the shares, has been criticised by analysts who see the stake as a drag on Volvo’s resources.
“As we have significant operational collaborations with Polestar and a financial relationship, it is logical for us to retain influence through a smaller 18% stake in Polestar,” said President and CEO of Volvo Cars Jim Rowan.
The company said it has a financial relationship with Polestar through an outstanding convertible loan of $1 billion.
China’s Zhejiang Geely Holding (GEELY.UL), which is a majority owner of Volvo Cars, will continue to provide operational and financial support to Polestar.
The stake distribution will be made through a 2:1 share split, followed by an automatic share redemption process, Volvo Cars said.
($1 = 10.3242 Swedish crowns)
Reporting by Rishabh Jaiswal and Shivani Tanna in Bengaluru; Editing by Sherry Jacob-Phillips
