Toronto, Ontario — In this weekly Tuesday Ticker economics report, AutoCanada resolves a four-year dispute with its former CEO and chairman, while Volvo announces extensive job cuts in North America.
AutoCanada and CanadaOne Auto Group announced today that they have agreed to resolve the legal proceedings between AutoCanada, Patrick Priestner and CanadaOne Auto that were commenced in 2019. Priestner was previously the CEO and chairman of AutoCanada.
As part of this resolution, AutoCanada has agreed to sell to CanadaOne Auto properties on which two of CanadaOne Auto’s dealerships are located, and CanadaOne Auto has agreed to amend the leases for two AutoCanada dealerships located on properties owned by CanadaOne Auto. The parties have also agreed to cooperate on certain commercial matters for each other’s mutual benefit and plan to work together on certain charitable initiatives.
AutoCanada first launched a $250 million lawsuit against Priestner in 2019, alleging he “breached his fiduciary and other duties by appropriating corporate opportunities of AutoCanada to acquire dealerships privately.” At the centre of the suit were multiple dealerships AutoCanada did not purchase at the time due to OEM prohibitions on publicly traded groups acquiring stores.
Neither party has admitted any wrongdoing or liability.
As of Tuesday at 10 a.m. ET, shares of AutoCanada traded at $25.59 per share, up 8.25 percent year-to-date.
Cuts in the name of costs
Volvo is cutting approximately ten percent of its assembly plant workforce in the U.S. and Canada amid a vast restructuring plan.
According to Volvo Car USA and Canada president Michael Cottonne, “there’s not any area of the business that is not impacted” by the restructuring, which will cost the OEM US$88 million.
An anonymous source on the matter said Volvo is “turning over every rock they can to make themselves more efficient.”
The restructuring effort, dubbed ‘Core+’ will help Volvo reach its goal for half of its 1.2 million units in predicted car sales to be fully electric by 2025. To make the mark, the OEM will need to release at least one new electric model every year.
As of Tuesday at 10 a.m. ET, shares of Volvo traded at US$20.11 per share.