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Swedish private equity firm buys into truckmaker Volvo

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A Swedish private-equity fund said Wednesday that it has five per cent of the voting rights in Swedish truckmaker Volvo AB and will seek membership on the company's board to force a restructuring.

In a statement to the Stockholm stock exchange, Swedish investor Christer Gardell's Cevian Capital II Master Fund LP announced it had bought 50,000 of series A shares in Volvo, bringing its total stake to five per cent of the votes.

The move confirmed months of speculation that private equity companies were looking to make a move on Volvo.

``Volvo is fundamentally undervalued,'' Gardell said. ``(Volvo chief executive) Leif Johansson and his team has done a great job, but that hasn't really showed through in the valuation.''

Gardell said Cevian's five per cent holding will give it a place on Volvo's election committee, and that it will seek a seat on the board of directors. ``We always go in actively (in our investments), so that is the ambition,'' he said.

Gardell said his US$2-billion fund, which is also backed by U.S. investor Carl Icahn, is looking to force through a restructuring of the company, but declined to disclose details.

``I don't want to share my thoughts on that right now,'' he said. ``That is something we want to bring up with the chairman.''

Analysts say Cevian's likely aim is to force Volvo to distribute more of its 19 billion kronor ($2.62 billion) in cash to shareholders.

The five per cent voting-rights stake includes shares owned by London-based Parvus Asset Management LLP, which has given Cevian the right to vote for its shares in Volvo.

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Swedish private equity firm buys into truckmaker Volvo
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