15 Jan 24. Volvo Group has signed an option agreement with John Cockerill Defense which gives the Volvo Group the right to sell Arquus after mandatory consultations with staff representative bodies. The consultations are expected to be finalized in Q1 2024. As a result of the option agreement, the Volvo Group’s operating income will be negatively impacted by approximately SEK 900m in the fourth quarter of 2023.
Arquus manufactures and sells specially designed vehicles to defense forces and employs about 1,200 employees in France. In 2022, Arquus represented approximately 1 % of Volvo Group revenues.
The negative earnings effect will be reported in the segment Group Functions & Other and will be excluded from adjusted operating income.
If the option is exercised, closing of the divestment will be subject to governmental approvals and other conditions.
Defense News reported that John Cockerill expects defense revenue of €1bn (U.S. $1.1bn) by 2026 from the combination of its defense division with Arquus, it said in a statement, adding that the acquisition will boost the company’s footprint in the global land defense market.
The deal would more than double John Cockerill’s defense business, combining its turrets and firing systems with the supplier of 90% of the French army’s wheeled vehicles. Arquus already offers a fire-support version of its VAB Mk3 armored personnel carrier with a 90mm turret from John Cockerill.
“The combined offer of light tank turrets and vehicles from John Cockerill Defense and Arquus will generate important synergies that will result in more innovative and more competitive vehicles to equip land forces around the world,” John Cockerill chief executive Francois Michel said in the statement.
Michel said the planned acquisition will be “transformative” for the European defense industry in the area of light tanks. The acquisition will allow John Cockerill to offer “the best level of quality and cost competitiveness” for both light tank turrets and military vehicles, the company said.
Volvo Group said it signed an option agreement with John Cockerill Defense that gives the company the right to sell Arquus after mandatory consultations with staff representatives, which are expected to be finalized by the end of March. Closing of the deal would be subject to government approvals, the Swedish company said.
John Cockerill Defense and Arquus target a staff of 2,000 people by 2026, with major operational centers in Belgium, France, India and Saudi Arabia. The combination would be a major step to industrially supporting the coordinated vehicle sourcing programs of the French and Belgian land forces, John Cockerill said.
The Belgian company in January 2023 merged its French defense business with its Agueris training-simulator unit, part of a bid to strengthen its commitment to France’s defense industrial and technological base.
John Cockerill reported 2022 sales of €1.05bn, including a declining contribution from its defense business, which posted revenue of around €240m in 2021. Arquus posted 2022 revenue of €559m and operating profit of €21.5m, according to company filings. Volvo Group said it will take a charge of 700m Swedish kronor (U.S. $87m) for the sale of Arquus against 2023 fourth-quarter operating income. (Source: Defense News)