Volvo inks LOI to sell external IT business to HCL Tech

Deal expected to close during the second quarter of next year

Global truck maker Volvo said on Tuesday it signed a letter of intent with HCL Technologies to sell its external IT business in a deal seen boosting operating earnings by about 900 million Swedish crowns ($108.5 million) on closing.

The Swedish company said in a statement that about 2,600 Volvo staff would be affected by the transaction and offered employment at HCL. The deal was expected to close during the second quarter of next year.

"Not only will our cooperation with HCL Technologies provide significant cost-savings. We will also make a capital gain when the contract is signed," Volvo's acting chief executive Jan Gurander said in a statement.

The sale of Volvo's external IT operations is part of sweeping efficiency measures aimed at cutting 10 billion crowns of structural costs at the truck maker.

($1 = 8.2969 Swedish crowns)