Geely buys Volvo for $1.8b
- Source: Global Times
- [03:22 March 29 2010]
- Comments
By Chen Xuefei in Gothenburg and Chen Xiaomin in Beijing
Chinese automaker Zhejiang Geely Holding signed a definitive agreement Sunday to buy the Volvo brand from US car giant Ford for almost $1.8 billion, an ambitious purchase analysts say signals a growing appetite of Chinese automakers for global expertise and market share.
Both Geely and Ford confirmed the deal late Sunday, which was signed at Volvo headquarters in Gothenburg by Geely president Li Shufu and Ford's financial director, Lewis Booth.
Ford paid $6.4 billion for Volvo Cars in 1999.
"I see Volvo as a tiger. It belongs to a forest, it can't be found in a zoo ... We need to lib-erate this tiger," Li told a press conference afterwards.
"The tiger has a heart and it lies in Sweden, (and) in Belgium but its 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.
Ford's Booth said his company got a "fair price" and "we're very happy with the deal."
Geely and Ford said they "established agreements to govern the use of intellectual property. These agreements will allow both Volvo and Ford to deliver their business plans and provide appropriate safeguards against misuse," according to the companies' statements.
"The accord signed fully guaranteed the independent operation of Volvo Cars, its implementation of existing business plans and sustainability for the future," Geely said on its website.
Volvo car plants in Sweden and Belgium will be maintained, while new factories will be built in China at an appropriate time, Geely said.
"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," Li said.
Ford had been attempting to sell Volvo since late 2008, due to its poor market performance. Geely, the Chinese fledgling automaker, was named as the preferred bidder for the Swedish subsidiary in October. Ford announced in December that it had agreed on the main terms of the sale of loss-making Volvo to Geely.
Volvo unions had earlier voiced objection to the deal due to expansion plans and possible layoffs. Volvo Cars employs around 16,000 people in Sweden.
Three Volvo unions this week storypressed for details "on the capital that will finance Volvo's daily activities, investment in future projects and the production target of 600,000 vehicles by 2015." But they gave their thumbs up to the deal earlier Sunday, according to local media reports.
Geely, a major private automaker headquartered in southeast Zhejiang Province that started to manufacture cars in 1998, is forecast to sell 2 million vehicles in 2015.
Spending 6 percent of its sales revenue on research and development, the automaker started in 2007 to transform its strategy from making low-end autos for the domestic market to making medium and high-end cars.
