STOCKHOLM: Truck maker Volvo said on Wednesday it had sold 1.27 million shares in Indian auto firm Eicher Motors for around 2.5 billion Swedish crowns ($301.59 million) and would plow the proceeds into boosting its core business.
Sweden's Volvo is under pressure to demonstrate the benefits of years of cost cuts and has in addition to major staff cuts also sold off non-core assets in recent years, above all its aerospace division in 2012.
"We are making the assessment that this money is of better use in other parts of our core business," Volvo spokeswoman Kina Wileke told Reuters.
Reuters reported on Tuesday that Volvo, which prior to the sale owned 8.4 percent of Eicher Motors, was planning to sell up to $300 million of stock.
After the stake sale Volvo now holds around 3.7 percent of shares in Eicher Motors.
Wileke said Volvo no longer needed to hold Eicher Motor shares for accounting purposes, which was the case when the joint venture with the company was set up in 2008.
Volvo said the sale would generate a capital gain of around 2.4 billion crowns and will have no impact on either ownership or control of truck and bus manufacturer, VE Commercial Vehicles, a 50-50 joint venture between Volvo and Eicher.
Asked whether Volvo would look to exit Eicher Motors in full, Wileke said: "This transaction is what we thought was suitable at the moment. We will have to see what we do in the future.
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