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Shares in Sweden’s Volvo Cars were on track for their worst day ever on Friday after China’s Geely sold part of its shareholding in response to investor concerns about the automaker’s small free float.
Geely on Friday morning said its commitment to the carmaker remained “steadfast”.
It said it had made the decision to “enhance” the value of the stock “through an increase of liquidity and offer more opportunities to generate sustainable long-term value for institutional and retail investors”.
After the sale completes, its shareholding in Volvo will be 78.7 per cent.
Shares in Volvo traded 10.3 per cent lower on Friday, retreating from a previous drop of 14 per cent.
Proceeds of the sale would be used to fund global business development within Geely, the Chinese company said.
Volvo’s chief executive Jim Rowan said the increase in public float would benefit “both new and existing investors”, allowing a “wider base” of market participants to invest in the carmaker.
Geely and Volvo had in 2020 planned a merger of their two auto units but scrapped those planes the following year.
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