Monday, November 20, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

China’s Geely Completes Volvo Acquisition

Photo: China DailyAug. 3 – China’s Zhejiang Geely Holding Group completed its acquisition of Ford Motor’s Volvo brand for US$1.5 billion yesterday in the largest ever takeover by a Chinese automaker.

After coming to terms on the deal in late March, Geely’s chairman Li Shufu met with Ford’s chief executive Alan Nulally in London on Monday to make the transaction official during a formal signing ceremony.

“This is a historic day for Geely, which is extremely proud to have acquired Volvo cars,” Li said. “This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design.”

Although the original agreement discussed in March was for US$1.8 billion, both parties have agreed to “true up” the difference at a later date when a final assessment of Volvo’s value has been completed. Geely said it has paid Ford US$1.3 in cash and issued a US$200 million loan note.

Geely has stated that it intends on maintaining Volvo’s headquarters in Sweden and that it will keep the company’s manufacturing plants running in Sweden and Belgium. The Chinese automaker also said that it intends to increase production of Volvo automobiles to 600,000 units annually, a 50 percent increase, within five years.

“Volvo is an excellent brand with a strong product line, and it has returned to profit after a successful restructuring,” said Mulally. “We are confident Volvo has a solid future under Geely’s ownership.”

Related Reading
China’s Geely Motors Finalizes Volvo Purchase

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One Response to China’s Geely Completes Volvo Acquisition

  1. The_Observer says:

    This is a much better deal than buying Hummer. The purchase cost to Geely was not great but the ongoing costs a different matter. The deal makes sense from a many perspectives. The demographic downturn in Europe means a smaller market for goods going into the future. The Swedes keep their headquarters, car design teams and a manufacturing plant. This will keep buyers from countries in in Europe and N. America. Added to it will be Chinese parts sourcing for costs savings and Chinese manufacturing plants for the potentially large Chinese and Asian markets. Hopefully this combination will return Volvo to profit in the near future.
    Currently China is buying a lot of good engineered product off Germany. This Volvo deal is a big first for China and Sweden. If it works out then this would further the win-win situation for China and Europe.

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