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Geely Named Favored Volvo Bidder, Paving Way for China Takeover.

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  #1  
Old 10-29-2009, 11:35 AM
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Geely Named Favored Volvo Bidder, Paving Way for China Takeover.

Oct. 29 (Bloomberg) -- Geely Holding Group Co. was named the “preferred bidder” for Ford Motor Co.’s Volvo Car Corp. unit, paving the way for China’s first acquisition of a major overseas automaker.

Geely is “very glad to see that we have made progress in the negotiations,” founder Li Shufu said in a statement posted on the company’s Web site yesterday. “If we reach a final agreement, Geely will protect and strengthen Volvo’s traditional status as a world-class brand.”

Talks may still stumble as Ford and Geely are yet to resolve protection for intellectual-property rights, a person familiar with the situation said. China’s biggest automaker outside of state control wants to buy Sweden-based Volvo to expand overseas as rising domestic competition crimps margins.

“To own Volvo’s brand and technology would certainly be beneficial for Geely,” said Liu Lixi, a Shanghai-based analyst at Northeast Securities Co. “But Chinese automakers don’t have the experience to manage a foreign brand, especially one this big.”

Geely has support from Chinese banks for the deal, according to the statement. No specific lenders were named. Geely’s group is prepared to pay about $2 billion for Volvo, less than a third of what Ford paid a decade ago, people familiar with the talks have said.

“Geely has the potential to be a responsible future owner of Volvo,” Ford Chief Financial Officer Lewis Booth said. The Dearborn, Michigan-based company has no plan to retain a stake in Volvo and has “no specific timeline to conclude the discussions.”

Hummer, Opel

Geely Automobile Holdings Ltd., Geely’s Hong Kong-listed unit, rose 0.7 percent to HK$2.89 at 10:34 a.m. in trading in the city. Geely Automobile isn’t directly involved in the Volvo deal and won’t provide funding, the unit said in a statement last night, adding it may cooperate with Volvo in the future.

Sichuan Tengzhong Heavy Industrial Machinery Co. is also in the process of buying General Motors Co.’s Hummer brand. Beijing Automotive Industry Holding Co. bid for GM’s Opel unit as Chinese automakers seek to boost margins by selling more expensive models overseas. China’s domestic auto market is dominated by low-cost vehicles, undermining the benefit of a 42 percent jump in passenger-car sales this year.

Beijing Auto failed in its bid to buy Opel because of concerns about intellectual-property rights, Chairman Xu Heyi said in July. Ford is also seeking safeguards in the Volvo deal as it will continue to provide components after the sale.

Overseas Struggles

A deal “would need to take into account the significant connections between Ford and Volvo in terms of continuing component supply, engineering and manufacturing,” John Fleming, chairman of Ford of Europe and Volvo, said in a statement.

Chinese automakers have struggled with previous overseas deals. Ssangyong Motor Co., controlled by SAIC Motor Corp., China’s biggest carmaker, entered receivership in February after sales plunged at the Korean sport-utility vehicle maker.

SAIC also bought rights for cars designed by the U.K.’s MG Rover Group Ltd. in 2005 to temper its reliance on partners GM and Volkswagen AG. Last year, GM and Volkswagen vehicles still accounted for more than 90 percent of SAIC’s sales.

Geely first approached Ford about buying Volvo in the summer of 2008, people familiar with the matter have said. Ford also talked to Beijing Automotive Industry Holding Co. and the Crown Group, led by former Ford director Michael Dingman, son James Dingman and Shamel Rushwin, a former manufacturing and labor executive at the automaker, the people said.




I must admit, I fear for what such a deal would mean for Volvo and their passenger safety.
 
  #2  
Old 03-28-2010, 02:22 PM
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yup, signed and sealed today

China's Geely seals Volvo Cars takeover

by Marc Preel Marc Preel – 4 mins ago
GOTHENBURG, Sweden (AFP) – Chinese carmaker Zhejiang Geely Holding sealed a 1.8-billion-dollar deal on Sunday to buy Volvo Cars as the Chinese company unleashed its global ambitions with what it called a Swedish "tiger".
The deal ends more than a decade under the ownership of Ford Motor Co. which saw the up-market Swedish carmaker become a loss-making thorn in the side of the US giant, burdened with its own woes.
Geely chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest growing car markets in the world.
"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger," he told a press conference after the deal was inked at Volvo Cars headquarters in Gothenburg, southern Sweden.
"The tiger has a heart and it lies in Sweden, (and) in Belgium but it's power should be projected all over the world.
"I see China as one of the markets where Volvo can show it has the opportunity to liberate itself," he said.
In the face of concerns that the Chinese group would slash jobs in Sweden, Geely said that it would keep Volvo Cars plants in Sweden and Belgium and was considering opening factories in China for the local market.
Geely said that it had not only secured financing for the 1.8 billion dollars (1.3 billion euros) it was paying, but was also eager to keep the struggling Swedish carmaker in operation.
It also said that the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.
The US group bought Volvo Cars, which is known for its sturdy, family-friendly cars, in 1999 for 6.4 billion dollars as part of an international push into the premium market, that eventually cost Ford dearly.
Ford Chief financial officer Lewis Booth told journalists that his company got a "fair price and "we're very happy with the deal."
For Geely, which started out as a refrigerator parts maker, the deal marks a new chapter in its international expansion after two of its Chinese rivals failed to take over Western brands, Hummer of the United States and Saab of Sweden.
The deal had initially caused consternation among unions at Volvo Cars, which employs around 22,000 people worldwide, including 16,000 in Sweden
Unions originally opposed the deal on grounds that it was vague on expansion plans and possible layoffs amid fears Geely would not provide financing for daily operations or future investments.
But on Saturday they pronounced themselves satisfied.
In addition to preserving Volvo Cars' factories in Sweden and Belgium, Geely said that the Swedish company would be run as a separate company with its headquarters in Gothenburg.
"Today I am reassuring that Geely is determined to protect and nurture everything that is great about Volvo. Volvo is Volvo and Geely is Geely," said Li, who is also the Chinese company's founder.
"Volvo will be run by Volvo management, and be strategically independent. They are distinct companies. Volvo is a Swedish business with a strong Scandinavian heritage," he said.
With a workforce of 12,000 people, including 1,600 engineers, the Geely group has grown into one of China's largest private carmakers since it launched its auto manufacturing business only in 1997.
It operates six car assembly and power-train manufacturing plants across China with a combined production capacity of 300,000 cars per year. The firm also owns nearly 500 dealerships and 600 service stations in the country.
Geely has an overseas sales and service network of nearly 300 outlets and runs plants in several foreign countries including Ukraine, Russia and Indonesia. Overseas sales have however totalled less than 200,000 units so far.
 
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Old 03-28-2010, 02:36 PM
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Lets hope Volvo's reputation stays intact.
 
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Old 03-29-2010, 12:12 PM
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Originally Posted by Alzilla
Lets hope Volvo's reputation stays intact.
Alex, what would that be? In the crapper like usual?
 
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