Volvo Construction Equipment is the world's oldest company in the field
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Volvo, the world's number two truck maker, is buying the road-building equipment business of Ingersoll Rand of the US for $1.3bn (£660m).
The deal will include 20 dealerships in North America and distribution arms in Europe and Russia.
Volvo, which sold its cars division to Ford in 1999, already has a large construction equipment division.
Volvo shares were 1.75% lower in early trading in Stockholm, with the market as a whole down 2%.
Ingersoll Rand's road development division is based in Shippenburg, Pennsylvania and has 2,100 employees.
Volvo chief executive Leif Johansson said the acquisition would give Volvo "a world-leading position within heavy road construction equipment".