The two enterprises signed a memorandum of understanding July 6, under which Autoliv will acquire up to 50 percent of Norma's shares.
Estonia's Norma, a dominant seat belt supplier to the Russian vehicle industry, has been one of Autoliv's licensees and is currently a components supplier to the Swedish company.
"Now we will do due diligence procedure, then we will conclude the payment agreement, and the agreement will be completed toward the end of August," said Mats Odman, director of communications at Autoliv.
"The price of the deal will depend on due diligence and the vision of Norma's management on the price of the share," said Juri Kao, Norma Group's board chairman.
The Estonian company's marketing value according to its present share price of 29.90 kroons ($2.09) is above 400 million kroons, and Autoliv will accordingly acquire about 200 million kroons worth of shares, said Sten Sumberg, trader at the Suprema investment company.
The price of Norma's shares has increased by 24 percent since the announcement of the negotiations with the Swedish company. The Securities Inspectorate noticed that the share price started rising before the deal was announced and it is now analyzing all the transactions.
Sumberg said the acquisition of the car-belt producer by Autoliv means primarily stability to Norma's shareholders and increases the value of the share.
"Norma used to cooperate with one big unstable client, Russia. Autoliv enables the company to expand to the West and also to Central-Europe," said Sumberg.
Last year Norma's sales reached 483 million kroons, while the Swedish company's sales amounted to $3.5 million. Autoliv has 60 wholly-owned subsidiaries and joint ventures with more than 20,000 employees in 28 vehicle-producing countries.
The Swedish company has expressed an intention to transfer the production of car safety belts and other components partly to Norma, and also to update the Estonian company's equipment.
The Swedes said they are interested in expanding their seat belt business in Eastern Europe and Norma, with its long-standing relationships with the Russian car industry, offers such an opportunity.
"We see two possible scenarios," said Odman. "We can start selling more products to Russia, the kind of products that Norma does not have. The other scenario is to use Norma as a supplier for certain products. We can also move the production from Western Europe to Estonia."
Autoliv President Lars Westbers also sees good potential in cooperation with the Estonian company.
"As a global company doing business with all major car producers in the world, we should also be able to further develop Norma by better utilizing its production capacity and its capabilities as a components supplier," he said.