Ingersoll Rand to Sell Its Road Development Business to Volvo

Volvo is building new roads into heavy highway construction,
redefining its position in the road market and increasing its manufacturing
muscle. The company just recently reached an agreement with Ingersoll Rand to
acquire the assets of the company’s road development division, a world-leading
manufacturer of heavy equipment for road construction and soil compaction with
revenues of $864 million in 2006. Operations also include materials handling
equipment. The purchase price amounts to $1.3 billion.

“I am pleased that we can continue to expand our successful
construction equipment business and the acquisition gives Volvo Construction
Equipment a world-leading position within heavy road construction equipment,”
says Volvo CEO Leif Johansson. “This acquisition is strategically important
since it will improve the overall competitiveness of Volvo CE as a full-range
supplier of construction equipment.”

The global market for road construction equipment is about $4
billion annually and is projected to grow substantially as a result of increased
investments in infrastructure globally. Volvo CE has a distinct ambition to
expand in this market and the acquisition complements current operations by
sharply strengthening Volvo’s presence in equipment for road construction work.

The acquired business includes a full range of heavy compactors, asphalt
pavers and milling machines and provides favorable growth possibilities. The
acquisition also strengthens Volvo CE’s position in the market for materials
handling equipment in North America.

In addition, the acquisition also includes 20 dealerships in
North America and distribution companies in Europe and Russia, which will
leverage Volvo CE’s sales of compact equipment, primarily in North America.

“Strategically, the acquisition of Ingersoll Rand Road
Development fits exceptionally well with Volvo’s current operations within motor
graders and positions Volvo as a full-range manufacturer of heavy road
construction equipment,” says Tony Helsham, president of Volvo Construction
Equipment. “Geographically, the purchase also fits Volvo CE very well and
provides attractive growth possibilities by capitalizing on the common dealer
network in North America, Europe and Asia.”