Chinese carmaker Geely eyeing $2 billion Volvo buyout deal
- Source: Global Times
- [08:57 September 10 2009]
- Comments
China's Geely Automotive said Wednesday that its parent company wants to bid for Ford's Volvo Car Corp, making the Chinese carmaker the latest to chase a foreign brand in a global industry overhaul.
A deal for Volvo, which analysts have valued at close to $2 billion, would boost the profile of Geely, a home-grown carmaker, and give it access to Volvo technology it needs to upgrade its cars.
But analysts doubt that China's 10th-largest vehicle maker could manage an international brand.
Geely's privately-held parent company, Geely Holding Group, would make any bid in conjunction with a government-backed investor, CEO Gui Shengyue told Reuters.
"I believe if Volvo is for sale and Ford has a global announcement, then our parent will participate," Gui said. "It is interested in Volvo's sedan business and not trucks."
Gui declined to put a value on a possible bid, but said Geely Holding was waiting for Ford to formally put Volvo up for sale.
Rather than taking a stake in Volvo, Geely Holding would seek full ownership, Gui said, adding that Ford will make a decision within a month on whether to sell Volvo.
"On the assumption that the parent company successfully acquires Volvo, it will fine-tune the product line and technology until Volvo becomes profitable, and then inject the assets into the listed company," said Vivien Chan, an auto analyst with Sinopac Securities Corp.
Geely has been upgrading its models to tap into China's growing affluent-driver market.
Beijing Automotive Industry Holding Corp (BAIC) and a mainly Swedish consortium including Dagens Industri and Konsortium Jakob AB have shown interest in Volvo, media reports have said, but Geely is the first confirmed bidder.
Some analysts questioned whether the privately-owned Chinese firm could manage an international brand.
"It's a risky move, even though it may help raise Geely's profile eventually," said Ji Junfeng from Changjiang Securities. "I'm not sure how Geely can turn around a brand like Volvo, but maybe we shouldn't underestimate the ability of privately-owned carmakers."
Reuters
