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Volvo's Mack acquisition gets Justice Dept. blessing

December 19, 2000

Volvo's Mack acquisition gets Justice Dept. blessing



By LAURA ERNDE / Staff Writer


The U.S. Department of Justice has approved Volvo's purchase of Mack Trucks Inc., clearing the way for the deal to be sealed by year's end, company officials said.

Mack's Hagerstown engine manufacturing plant could receive more work as a result of the acquisition, although details are still forthcoming.

"It's probably premature to estimate what effect it will have on the plant, but it's hard to imagine anything other than good coming out of it," said Volvo spokesman Thomas Clifford.

Earlier this year, Volvo President and Chief Executive Officer Leif Johansson said the Swedish company will build more engines in the United States as part of its purchase of Renault V.I. and its wholly-owned subsidiary Mack.

Since Volvo doesn't have an engine plant in the United States, it is logical to assume the company will look to the Hagerstown engine plant as the most efficient way to expand, Clifford said.

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More work would be welcome news for the Hagerstown plant's 1,338 employees, who endured a layoff in August and a one-week plant shutdown in October due to an industry-wide decline in truck orders.

Another temporary layoff is scheduled for Jan. 22 through Feb. 1, said Mack spokesman John Mies.

Maurice Kaiser, president of United Auto Workers Local 171, could not be reached for comment Tuesday.

To get Justice Department approval, Volvo agreed to divest its North American low cab-over-engine business, which amounts to less than 3 percent of the total heavy truck market in North America.

Volvo will acquire Mack in exchange for 15 percent of its stock shares once the agreement between the Justice Department and the two companies is approved by a U.S. District Court judge.

"After the closing we can immediately start the integration process. We are very eager to quickly implement the strategy for the new truck group and the merged powertrain units. Our intentions are to have a functional management and organization in place by early next year," Johansson said in a prepared statement.

Mack President and CEO Michel Gigou said he is pleased with the Justice Department's decision.

"This action represents a large step forward in the process of making Mack part of the world's second-largest heavy truck group, and provides us with even greater opportunities for continued profitable growth," Gigou said in a prepared statement.

Volvo and Mack's combined share of the market for heavy trucks is 28 percent in Western Europe and 24 percent in North America.

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