Volvo in talks for stake in Ashok Leyland - paper

MUMBAI/STOCKHOLM (Reuters) - The world's second-biggest truckmaker, Volvo AB, is negotiating with the controlling family of Ashok Leyland Ltd. for a stake in the Indian truckmaker, the Times of India newspaper said on Tuesday.

Quoting unnamed sources, it said the board of Volvo's India unit would meet on Tuesday to consider a proposal to buy a stake in Land Rover Leyland International Holdings, a UK-based firm that holds about 51 percent in Ashok Leyland for the Hinduja family.

Ashok Leyland has a market capitalisation of around $1.12 billion.

"We never comment on market speculation," said Marten Wikforss, head of media relations at Volvo. However, he added that Volvo was interested in acquisitions.

"We are basically interested in everything except heavy truckmakers in North America and Europe, and that is not because we wouldn't want to buy there, but because we are too big there, and we don't think we would get approval from competition authorities," he said.

Officials at Ashok Leyland could not immediately be reached for comment.

The Financial Times reported two weeks ago that Volvo was planning a series of acquisitions to broaden its product range.

Volvo has come under pressure recently from some shareholders to hand back some of its cash pile, which runs to some 32 billion Swedish crowns ($4.4 billion). That strong cash position has marked the company as a possible takeover target in the last couple of years.

"I don't see this as a reaction to recent talk. I think it is part of a long-term strategic plan," said Oppenheim analyst Michael Raab. "I think India is clearly, apart from China, one of the key regions for Volvo to expand in Asia.

"This is where the growth is. When you look at expectations regarding GDP growth for the next five to six years or so, India and China are expected to clearly outgrown the current core truck markets, which are western Europe and North America."

Earlier this year, Volvo bought a 13 percent stake in Nissan Diesel Motor Co. for 1.5 billion Swedish crowns with an eye to forging a new link to China, where Nissal Diesel operates a 50-50 joint venture with Dongfeng Motor Corp.

This month a senior Chinese executive at construction equipment maker Shandong Lingong Machinery Co. said Volvo was considering buying a controlling stake in the firm.

In July Iveco, Fiat's truck and bus division, sold its 15 percent holding in Ashok Leyland to the Hinduja family.

(Additional reporting by Johannes Hellstrom and Simon Johnson in Stockholm)