Volvo gets rid of the arms merchants

[kscarbel2]

Gustaf Tapper, Dagens Industri  /  November 4, 2016

Volvo withdraws from the defense industry. The attention surrounding dealers in Russia and the Middle East was too much for the anxious directors at the headquarters in Sweden. The most natural buyer of Volvo Governmental Sales lies in France, and French government-owned weapons manufacturer Nexter Systems* is likely to be interested. The positive is that Volvo is now evidently in a restructuring phase that can release billions.

*  http://www.nexter-group.fr/en

On a Friday when half of Sweden is on the autumn holiday, Volvo decides to send out this press release on a sensitive topic with only a brief text that is particularly well-sharpened:

"The Volvo Group has made a strategic review of the business area, Governmental Sales and intends to initiate a process to sell the business."

Towards the end there follows a sanitized description of the activity: "... manufactures and sells custom-designed vehicle for governments, armed forces, peacekeeping forces and aid agencies."

Sure, Volvo Governmental might sell one or two trucks to help UN-type organizations, but a much bigger deal is the armored vehicles. One example is the billion contract in February for 100 VAB Mk3 and 100 Sherpa combat vehicles for delivery to Lebanon - a deal managed by the French state arms export agency Odas and financed by Saudi Arabia.

At Eurosatory defense exhibition in June, Volvo had one of the largest booths with their military vehicles lined up. There were stacks of the New York Times wrapped in an advertisement on the four sides of Volvo. The cover - a jeep model Sherpa Light with heavily armed soldiers from the Special Forces.

You could describe it as someone in France had concocted the ultimate branding nightmare of Volvo Group’s Executive Board in Sweden. With such friends, you don’t need enemies ... And one can only imagine the reactions to related parties at Volvo Cars’ marketing group.

On the inside of the advertisement, Volvo governmental head Emmanuel Levacher told how the strategy for Volvo's growth in the defense looks, including an active role in the structure of business with competitors in the defense industry. Now it will also be so in the end, but perhaps not in the way Emmanuel Levacher had imagined. He will not stand as a buyer.

The core of Volvo Governmental is France-based Renault Trucks Defense, and the country's liberal views on arms exports are not the only culture clash over the years. At the head office in Gothenburg, it has been difficult to keep up with their creative French arms dealer export business, the challenging advertising, and the maneuvers that Volvo will participate in structural transactions.

The other year, Renault Defense ventured into cooperation with Russian tank producer UVZ to develop the Atom, a new combat vehicle armed with a machine gun. A giant order from the Russian army was in the pot. Also in 2014, Russian troops had just occupied Crimea. After a few weeks, it was decided to put cooperation on ice, but only this year the Volvo/Renault Trucks partnership with UVZ was terminated.

It is easy to understand if management related Volvo Cars had comments on the cooperation and the other arms deals. The risk is that the Volvo brand, owned jointly by Volvo Car and Volvo Group, could easily be affected. Finally, the difficulties in controlling the French proved to be too much for the anxious Swedes at Volvo's headquarters in Gothenburg. Now the defense business is sold.

The most natural buyer is state-owned French company Nexter which produces combat vehicles, artillery and ammunition. Nexter cooperates with Volvo on several products, including the “véhicule blindé de combat d'infanterie” infantry fighting vehicle and the Caesar howitzer*.

Another possible buyer is Germany’s Rheinmetall. The French government will closely monitor the sale and has the last word.

The other day, Volvo sold real estate for billions. Friday's initiative strengthens the impression that CEO Martin Lundstedt has launched a major streamlining. It is positive for shareholders and will release capital.

Last year, Di did a survey that showed that Volvo can withdraw 60 billion by selling assets odd, stock items and their properties. In several cases, companies with losses.

With this development, there is surely more to come.

* https://en.wikipedia.org/wiki/V%C3%A9hicule_blind%C3%A9_de_combat_d%27infanterie

   https://en.wikipedia.org/wiki/CAESAR_self-propelled_howitzer

 .

[kscarbel2]

Volvo Group to divest Governmental Sales

Volvo Group Press Release  /  November 4, 2016

Volvo Group intends to initiate a process in order to divest its Governmental Sales business area.

Volvo Group has conducted a strategic review of the Governmental Sales [military truck] business area and intends to initiate a process to divest this business.

“Governmental Sales has built a very strong position over the last few years with a positive development and a record order book. There are great opportunities to grow the business even further, HOWEVER, we believe that a new owner may be better placed to take the business to the next level. Consequently, we intend to start preparations to divest the business,” says Jan Gurander, Deputy CEO and CFO at Volvo Group.

Governmental Sales is a part of Volvo Group’s operations and its sales correspond to approximately1.5% of total sales. The business, which has about 1,300 employees, most of whom are in France [Renault/ACMAT,Panhard*], manufactures and sells specially designed vehicles to governments, the defense industry, peacekeeping forces and aid organizations.

The initiation of a divestment process is subject to the finalization of mandatory consultations with staff representative bodies.

*  http://www.renault-trucks-defense.eu/

    http://www.acmat.fr/

    http://www.panhard-defense.eu/

[kscarbel2]

If an entity offered a financially challenged Volvo a reasonable amount of money for the Mack brand right now, I do believe they'd give it serious thought. I suspect, given a choice between keeping Volvo Bus or Mack, they'd keep Volvo Bus (Several Chinese busmakers would like to follow in Geely's footsteps and acquire Volvo Bus).

If they could sell Volvo Construction Equipment (VCE) right now, which is what board chairman Carl-Henric Svanberg wants, they would probably want to hang on to Mack a bit longer. But the construction segment worldwide is at a low point so they can't get anything for it now.

At any rate, they certainly are selling everything that isn't nailed down.

[TeamsterGrrrl]

Problem is, there ain't much Mack left- Just the 3 decade old conventional cab, even older low tilt cabs, the Maxitorque transmissions, and the axles. Good designs, but showing their age- New designs would be more aero and ergonomic, many drivers can't handle a manual transmission, and with traction control now standard, is the Mack bogie still needed? And how 'bout an engine... Cummins is threatened with loss of market share from integrated competitors, but prefers to specialize on engines and leave those engine's homes to the truck makers. But Cummins did venture beyond engines decades ago when they bought Onan and gave their engines a home next to Onan's generators. To survive, maybe Cummins will have to buy Mack?

[kscarbel2]

16 hours ago, TeamsterGrrrl said:

Problem is, there ain't much Mack left- Just the 3 decade old conventional cab, even older low tilt cabs, the Maxitorque transmissions, and the axles. Good designs, but showing their age- New designs would be more aero and ergonomic, many drivers can't handle a manual transmission, and with traction control now standard, is the Mack bogie still needed? And how 'bout an engine... Cummins is threatened with loss of market share from integrated competitors, but prefers to specialize on engines and leave those engine's homes to the truck makers. But Cummins did venture beyond engines decades ago when they bought Onan and gave their engines a home next to Onan's generators. To survive, maybe Cummins will have to buy Mack?

You'd walk into it knowing that you were buying a hood, 30-year old cab, Maxitorque transmissions, steer axles and drive axles. As you said, all showing their age.

Then again, the American truck is due for massive evolvement, and what better marque to lead than (drum roll here).............Mack.

[kscarbel2]

Volvo Launches Renault Trucks Defense Sale

Defense News  /  November 4, 2016

Volvo kicked off the sale of its Renault Trucks Defense (RTD) subsidary on Friday by holding consultative talks with labor unions at its government sales division.

The deal reflects a move toward European consolidation, said Volvo Group spokesman Joakim Kenndal.

“Volvo Group has conducted a strategic review of the Governmental Sales business area and intends to initiate a process to divest this business,” Volvo said in a Nov. 4 statement.

“There are great opportunities to grow the business even further, however, we believe that a new owner may be better placed to take the business to the next level,” said Jan Gurander, Volvo deputy chief executive and chief financial officer. “Consequently, we intend to start preparations to divest the business."

The start of the sale is “subject to the finalization of mandatory consultations with staff representative bodies,” Volvo said.

Acmat, Mack Defense in the US, Panhard, RTD and Volvo Defense make up the government sales business, which employs more than 1,300 staff.

Renault Trucks Defense, the lead unit, posted 2015 sales of some €500 million (US $556 million) and had a target to double its annual sales by 2018 or 2019. Growth by acquisition had been ruled out.

Renault Trucks Defense was among the most profitable Volvo units, with annual profit close to double digits, according to an industry executive. There was, however, sensitivity over arms sales, which required Renault Trucks Defense to seek approval from Volvo.

Volvo’s search for a buyer has raised questions over whether Nexter, Thales or German manufacturer Rheinmetall might make a bid.

Any offer by Nexter would need an agreement with its partner KMW, a second defense executive said. A purchase of Renault Trucks Defense by Rheinmetall would lead to a European landscape where two French-German companies compete for a foothold in the land-based arms sector.

Nexter and Thales declined comment.

Nexter is the leading French land-based arms manufacturer, while Thales supplies onboard systems and builds the Bushmaster and Hawkei Australian light transports.

The planned divestment will raise questions over Renault Trucks Defense’s role in the French Army’s €6 billion Scorpion modernization program, which includes developing and building a Griffon multirole troop carrier, Jaguar combat vehicle and a light scout vehicle.

A production contract for some 2,000 Griffon troop carriers could be worth about €1 billion, based on a basic unit cost of €500,000 excluding onboard systems, the first executive said.  

Renault Trucks Defense is one of the core industrial partners with Nexter and Thales on the Scorpion program, with the Volvo unit receiving more than 30 percent of the 2014 development contracts worth almost €752 million, the second executive said. RTD will supply engines and drivelines for Jaguar and Griffon, which will have a high commonality of equipment.

Renault Trucks Defense and Nexter are partnered on maintenance of an infantry fighting vehicle, dubbed Véhicule Blindé de Combat et Infanterie, and a troop carrier, Véhicule Avant Blindé, which this year marked its 40 years of service.

Defense Minister Jean-Yves Le Drian said Nov. 2 in the lower house of the National Assembly that the government was ready to consider speeding up deliveries of the Scorpion vehicles, Agence France-Presse reported. “We can think about the issue concerning the years ahead. I am open to this discussion.”

That readiness follows remarks in September by Army Chief of Staff Gen. Jean-Pierre Bosser, who referred to studies for speeding up the Scorpion vehicle deliveries.

The Army would like to see a faster introduction by five years of the Jaguar and Griffon so there would be four or five battalions equipped by 2025 rather the present plan of 2030, the second executive said. That would reduce the maintenance cost of a variety of fleets including the new Scorpion vehicles, VAB, and aging combat vehicles AMX 10RC, Sagaie ERC 90 and VAB HOT to be replaced by the Jaguar.

Renault Trucks Defense chairman Emmanuel Levarcher told the French parliamentary defense committee on Jan. 27 that Volvo had not blocked export deals.

“Volvo group has never prevented us from exporting material,” he said. Volvo chairman Martin Lundstedt lived in France when he was head of the Scania truck company, in Angers, western France, and sold Scania trucks to the Direction Générale de l’Armement procurement office.

As the Ukraine crisis deepened in 2014, Renault Trucks Defense froze talks with its prospective Russian partner UralVagonZavod to develop a 30-ton infantry fighting vehicle named the “Atom”, as the company waited for instructions from Sweden and France.

[TeamsterGrrrl]

8 hours ago, kscarbel2 said:

You'd walk into it knowing that you were buying a hood, 30-year old cab, Maxitorque transmissions, steer axles and drive axles. As you said, all showing their age.

Then again, the American truck is due for massive evolvement, and what better marque to lead than (drum roll here).............Mack.

Wish there were a "White Knight" available to save Mack, and it'll have to be a white knight with deep pockets. You probably know the numbers better than I do, but I've heard the BILLION $$$ figure quoted as the cost of developing a new vehicle, and didn't Scania just invest twice that in their new line of trucks? That's a lot of money to put into a conventional cab class 8 truck, given that the whole world market for big conventionals is only 200,000 to 300,000 trucks a year, and 200,000 units a year is considered to be the minimum viability number for a light truck, and increasingly so for a heavy truck. A new Mack could try to use the same design for both cabovers and conventionals to increase the potential markets, but that tends to yield ugly results unless you make almost every panel unique to each version like Volvo did. You could try to move down into class 6 and smaller truck markets, but that's a pretty price competitive market with big players like GM and Ford that can leverage their mass production pickup cabs and engines to drive prices down. There's also the problem of a limited Mack dealer network beyond North America and Australia. And Mack would still need to automate the Maxitorque transmissions and update their axles and bogies, and then there's the not too small matter of sourcing an engine.

Then again, Cummins and Eaton have some pretty deep pockets, and their market share is threatened by integrated manufacturers... 

[kscarbel2]

Volvo plans to divest part of business that includes Mack Defense

The Morning Call  /  November 22, 2016

The parent company of Mack Trucks is planning to unload its governmental sales business area, which includes a North American defense division that has its headquarters in Upper Macungie Township.

"Governmental Sales has built a very strong position over the last few years with a positive development and a record order book," Jan Gurander, Volvo's deputy CEO and CFO, said earlier this month. "There are great opportunities to grow the business even further, however, we believe that a new owner may be better placed to take the business to the next level.

"Consequently, we intend to start preparations to divest the business."

The governmental sales business makes up about 1.5 percent of Volvo's total sales. The business also has about 1,300 employees, most of whom are in France.

But governmental sales also includes Mack Defense, which is headquartered in a suite at 7310 West Tilghman Street (Iron Run Corporate Center) in Upper Macungie.

While Mack Defense is a wholly owned subsidiary of Mack Trucks Inc., it is also part of Volvo's governmental sales business area, said spokesman Christopher Heffner.

"At this early stage in the process, we cannot comment on the exact scope of the intended divestment or whether or not it may impact Mack Defense," said Heffner, who refused to disclose the number of Mack Defense employees.

He did say, however, that employees at Mack Defense's headquarters in Upper Macungie manage defense engineering, contracting, purchasing, project management and finance activities. Its executive team is also based there.

According to its website, Mack Defense also has a regional office in Washington, D.C., a re-manufacturing facility in Middletown, Dauphin County, and assembles its military commercial-off-the-shelf trucks and its U.S. General Services Administration products at the Mack Trucks plant in Lower Macungie Township.

Mack Trucks employs about 1,480 people in the Lehigh Valley.

In July 2015, Mack Defense won a pair of contracts to provide standard military pattern trucks and equipment to the Canadian Armed Forces. The contracts, which have a combined value of $560 million in U.S. dollars, call for Mack to deliver more than 1,500 re-badged Renault Kerax 8x8 trucks*, 300 trailers and 150 armor protection systems for the vehicles, with deliveries slated to begin in summer 2017.

Vehicle assembly for those contracts, however, is taking place in Sainte-Claire, Quebec.

* http://www.bigmacktrucks.com/topic/40960-volvo-group%E2%80%99s-mack-defense-unit-to-supply-1500-re-badged-renault-kerax-8x8-trucks-to-canadian-armed-forces/

 

[mrsmackpaul]

My crystal ball isn't real bright, but I reckon Volvo is in the shit big time financially and doing everything they can to try and survive.

Serves them right. Wankers tried to takeover the world. They can suffer in their undies. The real shame is the small people these pricks will hurt along the way, the towns that will be destroyed when businesses close and are owed money. Then they can't pay their bills and it just snow balls on.

When big business does this, it makes my blood boil. Anyway, with any sort of luck, something good will come out of it for Mack, the workforce and customers. They need to catch a break sooner or later and get back to doing what they do best, building not only world's toughest and best trucks, but the business that rely on the trucks as well.

I've got my fingers crossed it will all work out ok for Mack and its people across the world.

Paul

[kscarbel2]

French Defense Minister Seeks to Reassure RTD Employees of Job Security

Defense News  /  December 8, 2016

French Defence Minister Jean-Yves Le Drian has told Renault Trucks Defense (RTD) employees that there is little to be concerned about following the announced sale of the military vehicle builder, which is seen as a strategic industrial capability.

Le Drian also announced RTD deals with Kuwait and the French Army worth a reported total of €770 million (US $826 million).

“I have to tell you that I will be extremely vigilant that … this strategic asset remains under our control, as this is a key element in our sovereignty,” he said Thursday in prepared remarks during a visit to an RTD plant at Fourchambault, central France.

“I can reassure you, with all my vigilance on the process underway, that I am not worried about your future,” he added.

France, meanwhile, has selected RTD to supply 3,700 light vehicles to the Army, he said. That deal was worth more than €500 million, Agence France-Presse reported. The Direction Générale de l’Armemment procurement office declined to comment, as a contract has yet to be signed.

Kuwait is due to order 300 Sherpa light vehicles in a deal worth close to €270 million, Le Drian said. The French minister backed the RTD offer when he visited Kuwait in August, and his Kuwaiti counterpart called him two days ago to tell him of the selection.

“All you have to do now is sign the contract,” he said.

The RTD plant at Saint Nazaire, western France, will assemble the 3,700 vehicles over four years, while Fourchambault will provide service support.

RTD will convert a station wagon-type civilian vehicle by strengthening the chassis and suspension and fitting military equipment, the company said in a statement. The first delivery is expected for 2017. The vehicle will have a 150-horsepower engine, weigh 3.5 tons and carry 900 kilograms.

Volvo said in November that RTD, the largest unit of its military vehicles business, would be sold off. RTD accounts for some 1.5 percent of total sales of the Swedish truck maker.

Renault Trucks Defense Group (Volvo Group Governmental Sales) - http://www.renault-trucks-defense-group.eu/

.

[kscarbel2]

Volvo working with investment bank to sell defense division

Bloomberg  /  February 3, 2017

Volvo Group is working with investment bank Rothschild & Co. to sell its defense unit.

The sale could attract interest from companies including BAE Systems, General Dynamics Corp. and CMI Group.

Tank maker KNDS also plans to bid, Co-CEO Frank Haun said.

Volvo said in November it wants to divest the division, which generates about 1.5% of group revenue and has about 1,300 employees, mostly in France. The unit sells defense, security and emergency-service vehicles under the Volvo, Renault and Mack brands as well as the Panhard and ACMAT businesses.

Cevian Capital, one of Volvo’s largest shareholders, has been pushing the Gothenburg, Sweden-based manufacturer to focus on making trucks and to simplify its “extreme conglomerate” structure by divesting some businesses.

[kscarbel2]

Global bidders line up for Renault Trucks Defense

Safran, an aeronautics equipment and defense company, is among European and American firms and investment funds that have considered bidding for Renault Trucks Defense (RTD).

“Safran is studying it,” a defense source said. “Everybody is looking at the dossier.”

CMI, a Belgian builder of turrets and guns for armored vehicles; Rheinmetall; and three venture capital companies are among those which have also taken a look at RTD, the source said.

“Safran has always been on the list” of firms taking a close look at RTD, a second defense executive said.

There was talk of Safran's interest a couple of weeks before Volvo issued a Nov. 4 statement on a planned sale of RTD. Other companies included BAE Systems, General Dynamics, Leonardo, Patria-Kongsberg and Rheinmetall.

Leonardo was not interested in bidding, a source in Italy said.  

RTD is a key company in the Volvo group's government sales unit, or VGGS, which the Swedish truck maker plans to sell off once staff consultations have been held. Other firms in VGGS include Acmat, U.S. truck-builder Mack, and Panhard, one of the oldest names in French motor industry.

Volvo has retained Rothschild as its bank adviser, two sources said.

The industrial logic behind Safran’s interest lay in an equipment company acquiring a vehicle builder, and selling its own kit to equip the platform, the first source said. An indicator is the partnership between Safran and Panhard to build Wasp, a light 7.62mm remote weapon system for armored vehicles.

Advent, Cinven and HIG are among investment funds which have looked at RTD, the source said.

Safran in September picked Advent for exclusive talks to spin off its identity and security business, formerly known as Morpho. Last month, the equipment maker who built the Felin infantry system made an agreed offer for Zodiac Aerospace, a specialist in airliner seats, so management teams are heavily occupied.

CMI is keen to bid for RTD, but the French Ministry of Defence (MoD)) previously issued a veto, as the government's preferred pick is KNDS, the Franco-German joint venture between Krauss-Maffei Wegmann and Nexter, La Tribune website reported Feb. 6.  

The Belgian firm is a “very logical” candidate, one which makes industrial sense, said a third defense source. CMI supplies cannons and turrets to General Dynamics Canada on a multibillion-dollar Saudi contract. A merger of CMI and RTD would create a European group of “very respectable size”.

Among CMI board members is Gérard Longuet, a former French defense minister, Belga News reported in 2014.

CMI has a French industrial presence with a factory in Distroff, northeast France, and an office just outside Paris, the third source said. Four to five months ago, Belgium told France the Belgian authorities want to buy Jaguar combat vehicles and Griffon troop carriers under the French Army’s Scorpion program, with the Belgian versions fitted with CMI turrets and guns and other locally sourced kit.

The French MoD has resisted against accepting bids from investment companies, sources said. But the Ministry for the Economy and Finance is keen on venture capital firms, as that boosts the pricing. 

General Dynamics is seen as a candidate, as the company has a strong European presence, having won a $600 million Danish contract last year with its Piranha 5 troop carrier and bidding in a U.K. tender for its mechanized infantry vehicle program.

BAE Systems, General Dynamics, Rheinmetall and Safran declined comment.

Nexter, the French state-owned land weapons company, has been seen as the natural bidder for RTD, all the more so as Defence Minister Jean-Yves Le Drian has said the government is keeping a close eye on the sale and seeks to protect the national interest.

France may have a say, but Volvo is steered by market economics and will look for the highest bidder, a French political source said.

KNDS is interested in making a bid for RTD, a KMW spokesman said.

A Nexter spokesperson said: “KNDS is interested in acquiring RTD. It is consistent with the KNDS strategy.

“KNDS is an actor in the consolidation of European land defense. The sale of RTD by Volvo is an opportunity.”

On the political front, the French MoD is watching the clock as a presidential election looms in May, followed by a parliamentary poll in June. That puts pressure on the ministry to reach an agreement, but Volvo will want to take its time to find a buyer, sources said. 

The MoD declined comment.

In a few months, there will be a new president and ministers at defense, industry and economy, so it is far from certain that Nexter will win RTD, the third source said.

The price for RTD is likely to be between €500-700 million (U.S. $533-747 million), or the equivalent of one year’s worth of sales, the first source said. Sales for this year are forecast at €600-€700 million, buoyed by a Canadian order won through Mack, and contracts for the French special forces, Kuwait, and Saudi Arabia to arm Lebanon.

The acquisition price is usually eight to nine times operating profit, or one year’s worth of sales, the source said. The order book is worth €4-5 billion, offering six to seven years’ work.

RTD had 2015 sales of €500 million.

The ideal buyer for RTD would be a defense rather than a civil company, with a complementarity of products, a second industry executive said. For Volvo, it would be one which pays the most.

RTD draws on its own funds to develop vehicles for the export market, which accounts for half of annual sales. There is fierce competition in exports from firms in Turkey, China, India, South Africa and Russia. There are also European and American competitors, and the European market is fragmented, as almost each country has a domestic producer.

[kscarbel2]

3 bidders emerge in battle to buy Renault Trucks Defense

Defense News  /  June 2, 2017

PARIS – French-German joint venture KNDS, Belgian CMI and private equity firm Advent each filed offers to buy Renault Trucks Defense (RTD), two industry executives said Friday.

A sale of RTD is part of the disposal by Volvo of its group government sales unit, which includes Acmat, Mack and Panhard. Rothschild acts as adviser to the Swedish truck maker on the divestment.

Cinven had looked at making an offer and decided to pull out, an executive said. Perhaps the British venture capital firm had bid for another company, curbing its appetite for acquisitions for now.

Bids on the table were non-binding preliminary offers, with a shortlist to be drawn up in three weeks, afternoon daily Le Monde reported. Those shortlisted would have access to detailed data, allowing a best and final offer to be made by the end of July. The French government will keep a close eye on the selection.

Volvo and KMW Nexter Defense Systems, or KNDS, declined comment. KNDS has previously confirmed its intention to make an offer.

“KNDS is an actor in the consolidation of European land defense,” a Nexter spokesperson told Defense News in February. “The sale of RTD by Volvo is an opportunity.”

That approach is based on a “complementarity” as Nexter and RTD work as partners on the French Army’s Scorpion modernization program, the VBCI infantry fighting vehicle and Caesar cannon, a second executive said. RTD specializes in armored vehicles less than 14 tons, while Nexter supplies heavier platforms.

If KNDS were to win the tender, RTD would join as a third partner to the French-German joint venture rather than face a shut down.

“An acquisition would not lead to any closures,” Nexter chairman Stephane Mayer told business daily Les Echos May 16.

RTD, which is cash rich, would need a new IT system, likely to cost €10 million to €15 million (US $11.3 million to $16.9 million) over five years and replace the present network which has servers in Sweden, the first executive said. The company makes double digit annual profit and has forecast 2017-18 sales of €700 million to €800 million (US $789 million to $902 million).

The Direction Générale de l’Armement procurement office is not involved in the present stage of the tender and would only intervene if there was a foreign buyer, a spokesman said.

“The DGA will seek assurance the key French requirements of our armed forces will be met over the long term, particularly in view of RTD’s role in the Scorpion program,” he said.

The previous French defense minister, Jean-Yves Le Drian, encouraged Nexter to bid for RTD, but there is now a new government formed, which may spark uncertainty over political support, the second executive said.

General Dynamics is unlikely to be on the short list as it is “impossible” France would accept a bid by a U.S. company, the first executive said. He pointed to the lack of reciprocity due to the Buy America Act and the America First campaign as the reason.

Cinven had considered a bid and had worked on a business plan, including an expansion by acquisition. Iveco of Italy and French privately owned Soframe were seen as potential targets. American Motors had also looked at RTD, Defense News was told. 

If CMI’s bid were accepted, that would add a new industrial actor to European industry, partnering a maker of guns and turrets with a vehicle builder. On brand names, Volvo uses the RTD and Mack company names by paying fees to Renault, the French car company which owns the names. Whichever bidder buys the Volvo unit will want to use the present brands, particularly Mack, a widely known American name. “It’s historic, it’s American,” an executive said.

Nexter displayed at the IDEX trade show in Abu Dhabi an updated version of its Leclerc heavy tank, equipped with a KMW remote controlled turret, indicating close ties between the French and German firms.

In the Scorpion program, Nexter, RTD and Thales are key partners on the Griffon multirole troop carrier and Jaguar combat vehicle.

.

[kscarbel2]

Volvo attracts KNDS, CMI bids for Renault Trucks Defence

Reuters  /  July 17, 2017

Swedish truckmaker Volvo has attracted two bidders for its armored vehicles maker Renault Trucks Defence (RTD) worth roughly 500 million euros (US$573 million).

Volvo put the unit up for sale late last year as it sheds non-core assets to reduce complexity across a group built through a series of large acquisitions. Volvo has already sold its aerospace unit and external IT operations as well as a large real estate portfolio [plus "Volvo Rents" in the US for US$1.1 billion and US$278 million stake in its Indian Eicher joint-venture].

French-German tank maker KNDS, which evolved from the merger of Nexter and Krauss-Maffei Wegmann, is expected to hand in an offer for RTD by a July 24 deadline, as is Belgian group CMI.

Private equity groups which initially expressed interest in RTD are not expected to take part in the auction, which is organized by Rothschild.

The French government favors an industrial buyer rather than a financial investor.

Volvo, KNDS and Rothschild declined to comment.

A CMI spokesman said the company is interested in RTD.

"Eighty percent of our group is owned by Bernard Sarin, a French businessman, and we have many French subsidiaries. We are a Belgo-French group that would integrate another French company and we would have synergies between Belgium and France. We are talking about more and more cooperation between the French and Belgian armies," he said.

Volvo may reap less than initially expected from the sale of RTD after a slump in recent trading, people familiar with the matter said.

RTD recently adjusted its business plan and now expects less than 80 million euros in 2018 earnings before interest, tax, depreciation and amortization, one of them said.

"Earnings are less important than the order backlog," another of them said, adding he would expect the group to sell for about 7 times its estimated core earnings.

[james j neiweem]

If Volvo kicks Mack to the curb, Mack could still build some decent vehicles using Cummins, Eaton, Allison and Hendrickson components. A big plus would be Cummins network. The biggest plus would be Volvo restrictions would be gone and allow creativity to flow. Cummins needs Mack and Mack needs Cummins, Eaton, Allison and Hendrickson. Seems like it would be a plus for all companies involved. I have a couple of  grand for the joint venture. Ha!

John Deere or Oskosh might be a good fit also.

Edited August 18, 2018 by james j neiweem

[TeamsterGrrrl]

'Cept Volvo would rather let Mack die than see Mack live on as a competitor.

[kscarbel2]

KNDS has finally filed a takeover offer for Renault Trucks Defense

La Tribune  /  October 6, 2017

KNDS has finally filed a takeover offer for Renault Trucks Defense (RTD). Krauss-Maffei Nexter Defense Systems (KNDS) presented an offer to the Swedish Volvo last Friday, the 29th of September. This could finally boost the sales project initiated by the truck manufacturer, who wishes to transfer his activity in defence, made up of Renault Trucks Defense (RTD) – which owns the brands Acmat, Panhard, and Renault Trucks Defense, the American brand Mack Defense and Volvo Defense.

The sale has been blocked since the summer, KNDS who have not sent in an admissible tender to Volvo, contrary to the Belgian group CMI. Clearly, the French-German group had not submitted a financial offer. The Swedish group was very embarrassed by the attitude of KNDS. As a result, the timetable has slipped from 30 to 45 days. The selection of the buyer could be decided by Volvo at the end of November, beginning of December, the worst in January.

A delirious asking price

If KNDS had not yet submitted an offer “admissible”, it had at least two profound reasons. In particular, the price charged by Volvo and its bank board, Rothschild. Volvo was anticipating a sale price of approximately 500 million euros. But Rothschild touted that it could do much better and win a jackpot of 700 million euros. But at the end of the due diligence (opening of accounts), KNDS and CMI was found “delirious” over the business plan devised by Volvo and Rothschild.

Also the sales price is considered too high. And this all the more that Volvo has withdrawn from sale the American brand Mack Defense, which had been obtained in 2015, a very important contract in Canada for an amount in excess of € 500 million approximately. The “clipping” of this activity also seems to be very complicated.

In addition, Volvo and RTD would not be the owners of the brands Renault Trucks Defense and Panhard (PSA).

As for Renault, the French manufacturer would like to see disappear the Renault Trucks Defense (RTD) brand disappear. Thus, according to several sources, CMI would have offered a sum of 400 million euros approximately, while KNDS estimates a selling price between 300 and 400 million euros.

A project that divides KNDS

At KNDS, the proposed acquisition of RTD in particular, the activities of light armored vehicles would join Nexter in the case of redemption, divides the French and the Germans. If the French attach much importance to this folder, even put the price, the Germans are much more looking. In clear, no question of doing anything, the family Bode-Wegmann (shareholder family of Krauss-Maffei) is not ready to open the financial floodgates.

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[kscarbel2]

Volvo Group discontinues the process to divest Governmental Sales

Volvo Group Press Release  /  October 17, 2017

Volvo Group has decided to discontinue the process to divest the Governmental Sales business area.

“Our Governmental Sales operation has a positive development and a strong order book. 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”, says Jan Gurander, Deputy CEO and CFO at Volvo Group.

Governmental Sales account for approximately1.5% of Volvo Group’s total sales. The business, which has about 1,300 employees, most of whom are in France, manufactures and sells specially designed vehicles to governments, the defense industry, peacekeeping forces and aid organizations.

[kscarbel2]

Volvo no longer trying to sell division that includes Mack Defense

Jin Harris, The Morning Call  /  October 18, 2017

Nearly a year ago, Mack Trucks’ parent company said it was starting a process to unload its governmental sales business area, a segment that includes a North American defense division based in Upper Macungie Township.

On Tuesday, however, Sweden’s Volvo Group announced it was halting that process.

“Our governmental sales operation has a positive development and a strong order book,” Volvo Group Deputy CEO and CFO Jan Gurander said in a news release. “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.”

Mack spokesman Christopher Heffner confirmed the discontinuation includes Mack Defense, a wholly owned subsidiary of Mack Trucks Inc. that is headquartered in a suite at 7310 W. Tilghman St. in Upper Macungie.

Mack Defense is also part of Volvo’s governmental sales business area, a segment that accounts for 1.5 percent of the company’s total sales and employs about 1,300 people, most of whom are in France. Volvo’s governmental sales business manufactures and sells specially designed vehicles to governments, the defense industry, peacekeeping forces and aid organizations.

Mack has typically declined to disclose the number of Mack Defense employees for competitive reasons. Mack Defense’s headquarters, however, is known to manage defense engineering, contracting, purchasing, project management and finance activities.

Mack Defense is just one part of Mack Trucks’ presence in the Lehigh Valley, a footprint that includes a 1-million-square-foot assembly plant in Lower Macungie Township that employs over 1,800 people.

[kscarbel2]

Lack of US Mack brand cut bids in Volvo sale

Pierre Tran, Defense News  /  October 19, 2017

PARIS – An absence of the US Mack Defense brand name played a key role in slashing the bidders’ valuation of Volvo’s military vehicles business, which led to the Swedish company to cancel its tender, two industry executives said on Wednesday.

The bidders’ valuations in the sale of the Volvo Group Governmental Sales unit were essentially based on Acmat, Panhard and Renault Trucks Defense, based in France, the sources said.

CMI, a Belgian firm that specializes in guns and turrets, and Franco-German joint venture KNDS, were the rival bidders in the competition, which Volvo said yesterday had been cancelled due to low bids. Volvo will maintain operations of the government sales unit.

The US Mack Defense unit was excluded from the sale, dragging down the two bids, which were around €400 million (US $471 million), said the first executive.

Volvo wanted to hold on to the Mack Defense brand name and business because the U.S. unit won in 2015 a contract worth more than €500 million (US $588 million). That deal was to supply more than 1,500 trucks to the Canadian Army, with delivery between mid-2017 and the end of 2018 and an option for a further 600 units.

These are not just eight-wheel drive commercial trucks but vehicles delivered to military specification, including elements such as bullet-proof armored driver’s cab and central tire inflation system, the executive said.

RTD and Panhard build the vehicles in France and ship them bearing the critical Mack brand name, the executive said. The cab will be assembled in Canada.

Retaining the Mack “name” gives Volvo direct access to the U.S., the biggest military market. Mack does not build vehicles in the U.S. but has set up an engineering and prototype center.

The 2015 contract for the Canadian Army’s medium support vehicle system is the largest award for Mack since World War II, the company said on its website.

A Volvo spokesman, Joakim Kenndal, refused to comment on the Mack business.

The canceled sale has injected doubt over the future of Volvo’s military vehicles business, with a view that the Swedish company is waiting to put the unit back on the market to fetch a higher price, the executive said. That uncertainty will likely weaken sales as potential customers want to know the stability of suppliers of military gear. It remains to be seen whether Kuwait will now sign a contract for the RTD Sherpa light vehicle.

That prospective Kuwaiti deal, worth close to €270 million, was announced last December by the then French defense minister Jean-Yves Le Drian while on a visit to an RTD plant.

“Long term partnership is key in the military market,” the executive said. Lower sales hurt the order book, weakening the valuation. So if Volvo were to try to sell the division again, the price will be lower than the CMI and KNDS valuations, which were already considered too low.

Both the rival bidders submitted offers of around €400 million, a second executive said. The very closeness of the competitors’ valuation signalled that Volvo had overvalued the unit.

Volvo, advised by Rothschild, had expected bids of around €500 million, the equivalent of 2015 sales of RTD.

KNDS made its offer after the joint venture partners Nexter and Krauss-Maffei Wegmann agreed on valuation, the second source said. For the former, there were industrial and political factors underlying its valuation, while the latter, a private firm of the Bode family, is keyed to financial interests and to buy “at the right price.”

That the sale boiled down to just two bidders reflected a French political chill toward bids from foreign and venture capital firms for a military company, the second source said. Of venture capital firms, Advent was seen as a strong contender but there was talk of a clear political message of a lack of welcome, perhaps to avoid any suspicion that president Emmanuel Macron, a former Rothschild investment banker, had shown preference.

RTD is the main unit in the Volvo Group Governmental Sales division, which accounts for some 1.5 percent of group sales. The government sales unit employs some 1,300 staff, mainly in France.

Acmat sells into Africa, RTD is strong in the Middle East and Panhard sells in Asia. The U.S. Africa Command has an order for Acmat Bastion troop carriers for African nations.

State-owned Nexter works on the chassis and RTD on the engine and driveline on the Griffon multirole troop carrier and Jaguar combat vehicle in the French Army’s €6 billion Scorpion program.

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[kscarbel2]

"Mack" today is nothing more than a "name" on a foreign truck.

I suspected the Canadian deal was the sticking point. Mack Defense is nothing more than a shell company for a foreign aggressor. Go Oshkosh! Go Navistar! 

[Lmackattack]

the military has become a special market. Besides tractors that the military needs just to haul around civilian style trailers. I cant think of many Class 8 makers that have a specific chassis for Military.  Its almost like Fire trucks of today (USA) Just about every fire truck is Specific to itself. I always thought that was a bad idea as if a City had a fleet of them they are all different and nothing really interchanges but What do I know.

[james j neiweem]

KS Go Oskosh/Go Navistar(minus the aggressor Volkswagon)----(Go Mack -Eaton- Allison -Hendrickson)

[kscarbel2]

Sale of Renault Trucks Defense comes to ‘definitive halt’ ... for now

Defense News  /  October 31, 2017

PARIS ― The idea of selling Renault Trucks Defense could be dead in the water, however some wonder whether a French Army competition for a light multirole reconnaissance vehicle could resurrect the move.

There’s a school of thought that the sale of RTD ― a subsidiary of Swedish truck-maker Volvo ― is simply postponed rather than canceled. And according to three defense executives, the tender for the Army vehicle, dubbed Light VBMR, is key to the future of RTD.

Winning a contract worth hundreds of millions of euros would boost the value of the company and bring back the sale of Volvo’s military business, Volvo Group Governmental Sales, the sources said.

“Light VBMR is a determining factor,” an executive said. RTD is the major part of the government sales unit.

That expectation of a sale clashes with remarks by Joël Barre, the head of France’s Direction Générale de l’Armement procurement office, or DGA, who said Oct. 18 that Volvo would not put the subsidiary back on the market.

“Concerning RTD, there will not be a sale,” Barre told the defense committee of the lower house National Assembly, an official record of the meeting showed.

Barre told legislators he had seen Jan Gurander the day before and asked the Volvo deputy CEO and chief financial officer whether there had been a cancellation or a postponement of a few months.

“He guaranteed that there is a definitive halt on a sale, assuring me that he would give RTD the resources to develop itself,” he said, adding that the DGA would keep a careful eye on these “verbal commitments.”

RTD chairman Emmanuel Larcher — who accompanied Gurander — backed up the remarks of the Volvo senior executive, Barre said.

‘They have to sell it‘

Industry executives, however, expect a sale of RTD, in part because the company is seen as a strong candidate in the competition for the Light VBMR.

There is a view that both the previous bidders, CMI and KNDS, had factored in RTD winning the Light VBMR contract in their valuations, a source said. So even if RTD were to win the deal, the prospective bids would not rise.

Volvo called off the sale of the VGGS division last month after a competition — which ran almost a year — failed to attract bids as high as the Swedish company and its bank adviser, Rothschild, expected.

According to the three executives who spoke to Defense News, among the bidders for the light vehicle contract are Engie Ineo, teamed with Austrian partner Achleitner; KNDS; RTD; Soframe; and Thales.

A selection in the tender for the light vehicle is expected by the end of the year or early next year, an executive said. The best and final offers have been handed in and are being assessed.

A DGA spokesman confirmed the competition has been launched and is underway. No further details were available.

One view is that by winning the light vehicle contract, RTD would boost prospective bids by €200 million to €300 million (U.S. $233 million to $349 million) in a renewed sale of VGGS.

RTD has a strong position as major supplier of light vehicles to the French Army, but there seems to be uncertainty over its future in the wake of Volvo’s attempt to sell the unit.

The Volvo governmental sales unit includes Acmat, Mack and Panhard alongside RTD.

“They have to sell it,” a source said. The core business of Volvo is commercial trucks, while VGGS accounts for only 1.5 percent of group sales.

In the tender for the light vehicle, Thales was expected to offer its Australian Bushmaster vehicle, which could be assembled under license in France with an industrial partner. The electronics company displayed a Bushmaster at the trade show Forum Entreprise Defense, held Oct. 18-19 at Versailles, just outside the capital, an executive said. Equipment service was the theme of the show.

RTD was expected to offer its Sherpa or Bastion vehicles, while KNDS could pitch a Krauss-Maffei Wegmann four-wheel drive vehicle, which equips German and Polish special forces.

The light multirole vehicle is part of the French Army’s Scorpion modernization program, with a first delivery due in 2021.

The Army expects an increased order of 558 light vehicles, compared to a previous target of 358 units, the service website shows. That revised number reflects the government’s 2016 decision to boost the strength of the Army in an anti-terrorist drive.

The DGA confirmed the higher order. A first batch of 400 units is due by 2025 under the first phase of Scorpion, with the balance of orders expected in the second phase.

The Army requirement is for a 10-ton, four-wheel drive vehicle to equip command, brigade, intelligence and electronic warfare units. The vehicle will be equipped with a standard information and command network, software-defined radio, and electronics, and it will be armed with a remote-controlled 12.7mm or 7.62mm machine gun.

The Light VBMR vehicle will replace the Véhicule Blindé Léger scout car.

Volvo said Oct. 17 the company would “discontinue” the sale of its government sales unit as offers had been too low, and that the group would continue with the operation.

CMI and KNDS had filed rival bids of about €400 million for VGGS, which Volvo and Rothschilds considered too low in view of expectations of offers of €500 million to €700 million.

CMI is a Belgian firm that build guns and turrets for armored vehicles. KNDS is a joint venture between Krauss-Maffei Wegmann and Nexter.

[kscarbel2]

Renault Trucks Defense renamed Arquus

Andrew MacDonald, IHS Jane's Defence Industry  /  May 29, 2018

Renault Trucks Defense, an armoured vehicle subsidiary of Volvo Group, was renamed Arquus on 24 May, as part of the launch of a new strategy for the business.

Renault Trucks Defence, which produces wheeled armoured vehicles and is also responsible for the Panhard and Acmat brands, had been targeted for divestment from Volvo for close to a year, until efforts to find a buyer were dropped in October 2017.

The company’s rebranding and new strategic plan come just months after the company failed in its bid to win a contract for France’s Véhicule Blindé Multi-Rôle Léger (Light Multirole Armoured Vehicle, VBMR-L), a replacement for the Véhicule de l'Avant Blindé (Forward Area Armoured Vehicle) platforms it supplied to the French Army from the 1970s onwards.

Arquus Website - https://www.arquus-defense.com/

Edited August 17, 2018 by kscarbel2