Renault cuts back on stake in Volvo

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THE FRENCH car maker Renault further distanced itself from Volvo yesterday in the wake of their failed merger by selling more than half its shareholding in the Swedish group, writes Michael Harrison.

Renault said it had disposed of 3.75 million shares in the parent company, Volvo AB, reducing its stake from 8.27 to 3.45 per cent. The sale, arranged through a New York broker, netted an estimated pounds 208m.

The share sale marks a further stage in the disengagement of Renault from Volvo following the collapse of their merger last December. It may also be connected with the flotation of Renault planned for late this year.

Last week the two companies agreed to scrap their joint component purchasing and quality control organisations, having already suspended work on the P4 project, a joint development to produce a common platform for the car that will replace the Volvo 900 and Renault Safrane.

A Renault spokesman described the share sale as part of the 'continuing disentanglement of Renault from Volvo'. However, it did not alter the cross-shareholdings the two companies have in each other's operating divisions.

Renault continues to own 25 per cent of Volvo cars and 45 per cent of its trucks business while Volvo has a 20 per cent stake in Renault's car operations and 45 per cent of its trucks division.

The Stockholm bourse said it had monitored a transaction involving 3.2 million Volvo shares traded at Skr655 late yesterday morning. Shortly before the trade was registered Renault announced that it had cut its shareholding in Volvo.

The share sale was handled by the broking firm Carnegie Fondkommission, which placed the holding with a large number of institutions in the previous 24 hours and then registered the block as one.