Volvo close to being sold in China
US auto giant Ford said Wednesday that it had reached a deal with China's Geely.
China's "car nut" appears close to sealing a deal to buy US automaker Ford's Swedish unit Volvo, a sale he compared to a "poor Chinese lad marrying a Hollywood film star."
Wednesday it had settled all "substantive commercial terms" of a deal to sell its Swedish unit, Volvo Cars, to China's Zheliang Geely Holding Group.
Li Shufu, Geely's CEO, who has a "car nut" reputation in China, said Wednesday in Beijing that his company hopes to sell on the global marketplace.
"The idea of Geely is that we will let Chinese cars go global, instead of just letting global cars be sold around China," he said.
"But I firmly believe that, in the future, where there is a road, there will be a Chinese car," he said.
Ford, the No. 2 US carmaker, said work still remained before finalizing the deal, including "final documentation, financing, and government approvals." The company said it expected "a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals."
Geely confirmed in a statement released on its website late Wednesday that a deal had been agreed upon and echoed Ford's expectation of signing in the first quarter of next year, with official approval expected in the second quarter.
Neither company released financial terms of the deal, but Reuters said it was estimated at $1.8 billion, which would make it the largest-ever foreign acquisition by a Chinese carmaker.
Yao Jian, a spokesman with the Ministry of Commerce, was quoted by Chinese media as saying that the deal would harness China's capital and foreign reserves to boost its experience in international business deals.
"It will be helpful to gain the technology and brand image of an international corporation," Yao was quoted as saying.
Ford said the deal would give Volvo, a premium brand renowned for its sturdy, effective cars, the resources "to further strengthen the business and build its global franchise."
Geely said that Volvo would retain its leadership in safety and environmental technologies "should a stock purchase take place."
It also noted that Volvo "will be uniquely positioned as a world leading premium brand to exploit opportunities in the fast growing China market."
Ford announced in October that Geely was the preferred bidder for Volvo, which it acquired for $6.4 billion in 1999.
The news was welcomed in Sweden, where Volvo was founded in 1927.
"Our hope, and that of all of us who feel strongly about Volvo, is that (Geely) will be a strong and long-term owner and that it will make it possible to keep a lot of production here," Swedish Prime Minister Fredrik Reinfeldt said then.
Volvo has around 16,000 employees in Sweden out of its global workforce of 22,000 people. Geely said Wednesday it had held meetings with labor representatives and government officials in Belgium and Sweden, where Volvo's production is based.
An independent automaker, Geely has a workforce of 12,000 people and has total assets of more than 14 billion yuan ($2.05 billion). It operates six car assembly and powertrain manufacturing plants across China with a combined production capacity of 300,000 cars per year and claims to be the only Chinese carmaker to have developed its own engines.
A poll conducted by the Chinese online portal iFeng on its autos channel found that as of last night, roughly 60 percent of respondents favored the deal, while another 40 percent considered it risky.
Xu Changming, a senior analyst at the State Information Center, told iFeng that while the deal would give a "positive boost" to China's domestic brands, it would also pose challenges to Geely. Managing Volvo could be challenging, since Volvo's brand influence outweighs Geely's, Xu said. He said the deal will be risky if Geely doesn't handle it well.
Source: Volvo close to being sold in China
China's "car nut" appears close to sealing a deal to buy US automaker Ford's Swedish unit Volvo, a sale he compared to a "poor Chinese lad marrying a Hollywood film star."
Wednesday it had settled all "substantive commercial terms" of a deal to sell its Swedish unit, Volvo Cars, to China's Zheliang Geely Holding Group.
Li Shufu, Geely's CEO, who has a "car nut" reputation in China, said Wednesday in Beijing that his company hopes to sell on the global marketplace.
"The idea of Geely is that we will let Chinese cars go global, instead of just letting global cars be sold around China," he said.
"But I firmly believe that, in the future, where there is a road, there will be a Chinese car," he said.
Ford, the No. 2 US carmaker, said work still remained before finalizing the deal, including "final documentation, financing, and government approvals." The company said it expected "a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals."
Geely confirmed in a statement released on its website late Wednesday that a deal had been agreed upon and echoed Ford's expectation of signing in the first quarter of next year, with official approval expected in the second quarter.
Neither company released financial terms of the deal, but Reuters said it was estimated at $1.8 billion, which would make it the largest-ever foreign acquisition by a Chinese carmaker.
Yao Jian, a spokesman with the Ministry of Commerce, was quoted by Chinese media as saying that the deal would harness China's capital and foreign reserves to boost its experience in international business deals.
"It will be helpful to gain the technology and brand image of an international corporation," Yao was quoted as saying.
Ford said the deal would give Volvo, a premium brand renowned for its sturdy, effective cars, the resources "to further strengthen the business and build its global franchise."
Geely said that Volvo would retain its leadership in safety and environmental technologies "should a stock purchase take place."
It also noted that Volvo "will be uniquely positioned as a world leading premium brand to exploit opportunities in the fast growing China market."
Ford announced in October that Geely was the preferred bidder for Volvo, which it acquired for $6.4 billion in 1999.
The news was welcomed in Sweden, where Volvo was founded in 1927.
"Our hope, and that of all of us who feel strongly about Volvo, is that (Geely) will be a strong and long-term owner and that it will make it possible to keep a lot of production here," Swedish Prime Minister Fredrik Reinfeldt said then.
Volvo has around 16,000 employees in Sweden out of its global workforce of 22,000 people. Geely said Wednesday it had held meetings with labor representatives and government officials in Belgium and Sweden, where Volvo's production is based.
An independent automaker, Geely has a workforce of 12,000 people and has total assets of more than 14 billion yuan ($2.05 billion). It operates six car assembly and powertrain manufacturing plants across China with a combined production capacity of 300,000 cars per year and claims to be the only Chinese carmaker to have developed its own engines.
A poll conducted by the Chinese online portal iFeng on its autos channel found that as of last night, roughly 60 percent of respondents favored the deal, while another 40 percent considered it risky.
Xu Changming, a senior analyst at the State Information Center, told iFeng that while the deal would give a "positive boost" to China's domestic brands, it would also pose challenges to Geely. Managing Volvo could be challenging, since Volvo's brand influence outweighs Geely's, Xu said. He said the deal will be risky if Geely doesn't handle it well.
Source: Volvo close to being sold in China
