Workers assemble a car at AB Volvo's factory in Belgium.
Zhejiang Geely Holding Group will become the largest shareholder of AB Volvo by capital after it agreed to acquire 8.2 percent equity and 15.6 percent voting rights in the Swedish manufacturer of trucks, buses, construction equipment and engines.
In a deal with Cevian Capital, Geely has agreed to buy all of its 88.47 million A shares and 78.77 million B shares in AB Volvo, which is subject to regulatory approval, the Chinese carmaker said in a statement on Wednesday.
Geely did not disclose the value of the transaction, which will make it the second-largest owner of AB Volvo by voting rights after investment firm Industrivarden.
The acquisition follows Geely's 2010 takeover from Ford Motor Co of Volvo Car Group, which was Volvo's passenger car business, and is now seeing fast development.
"Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo," said Geely Chairman Li Shufu.
"We will support the board of directors and the management of AB Volvo in their continued execution of the current strategy," Li said.
Daniel Donghui Li, executive vice-president and chief financial officer of Geely, said the company will share with AB Volvo its global knowledge, Chinese market expertise and R&D capabilities especially in the fields of electrification, autonomous driving and connectivity.
AB Volvo unveiled a self-driving truck prototype in Beijing last month as part of its broad campaign to step up efforts to tap China's commercial car market, which grew 14.8 percent year-on-year to 3.75 million vehicles in the first 11 months of this year.
John Zeng, managing director of LMC Automotive Shanghai, said the deal could also pave the way for Geely to develop its own truck business in the future.
Besides Volvo, Geely has a controlling stake in Geely Auto Group, strategic investments in Proton Holdings Bhd and Lotus Advance Technologies and ownership of the London Electric Vehicle Company, and flying car company Terrafugia Inc.
Geely is one of the fastest growing carmakers in China. It sold 1.09 million Geely-branded cars in the first 11 months of the year, up 66 percent year-on-year and its Volvo Car Group sold 513,051 cars, an increase of 8.3 percent over the same period last year.