Geely’s procurement of Volvo almost over
From China.org.cn
Geely’s procurement of Swedish auto giant Volvo is approaching the final stage, the National Business Daily learned from Sweden. Volvo and its owner Ford Motor Company are expected to make the final approval as early as this month.In addition to Geely, which will get the majority of Ford’s stake in Volvo, a Swedish company will also acquire the remaining shares. Meanwhile, Ford will keep 10-15 percent of its presence in Volvo for the following 7-8 years, in order to facilitate the launch of new Volvo models.Ford plans to sell Volvo at around 20 to 25 billion Swedish Kronas (US$2.528 billion to US$3.159 billion), of which Geely will pay 15.6 billion Swedish Kronas.Previously, the Volvo Engineers Union had expressed dissent about the deal and wished for a European owner instead of Chinese Geely, an opinion also shared by higher officials in the Swedish government. However, Ford’s “package sale,” which involves a local Swedish company, greatly eased the dissent.Some experts told the National Business Daily yesterday that Geely’s boss, Li Shufu, will not merge the two companies, but will keep Volvo’s operation independent.Regarding Volvo’s XC90 manufacturing site in China, insiders from Geely mentioned that both Dong Guan in Guangdong Province and Tianjin Municipality are likely places. However, rumours spread earlier this month saying Beijing and Bazhou in Hebei Province may also be the host for the Swedish vehicles.
Obviously the Chang’an-Volvo JV is expected to stay on track, at least for the short term, but eventually it will probably be terminated and become a Geely-Volvo JV. Geely’s purchase of Volvo is expected to give it a huge technology boost over its Chinese competitors and an excellent pedigree brand. Geely CEO, Li ShuFu is the next Bill Gates.
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Most China-bashers are racists or are afraid of China returning to her position as the leading country in the world.
Volvo will eventually go bankrupt if Geely doesn’t rescue it.
I hope this deal with Geely will prosper..
@ China’s return to Greatness
> Most China-bashers are racists or are afraid of China returning to her position as the leading country in the world.
And can you blame the Swedish after looking at what Chinese did to MG and SSangyong?
http://www.google.com/hostednews/afp/article/ALeqM5hUl-rx4E0MV7WVmY_SULiRwT5XBw
“Volvo engineers seeking to buy carmaker from Ford: report
(AFP) – 1 day ago
STOCKHOLM — Volvo engineers have launched a bid to buy the loss-making Swedish automaker from US giant Ford to stop it from falling into Chinese hands, a newspaper report said on Saturday.”
@ China’s return to Greatness
And can you blame the Swedish for fearing Chinese after witnessing what Chinese did to MG and SssangYong?
http://www.google.com/hostednews/afp/article/ALeqM5hUl-rx4E0MV7WVmY_SULiRwT5XBw
“Volvo engineers seeking to buy carmaker from Ford: report
(AFP) – 1 day ago
STOCKHOLM — Volvo engineers have launched a bid to buy the loss-making Swedish automaker from US giant Ford to stop it from falling into Chinese hands, a newspaper report said on Saturday.”
this is a very risky move. Li would have to successfully move production from Sweden to China. Wages are too high in Sweden. And that is going to take at least 3 years. For the next 3 years volvo would be lossing money and Geely has to come up money to build a new production facility in china and use locally produced parts. Geely’s in-house engineering team would have to absorb the technology. This is not an easy task. Ford could not bring volvo to profitability, Geely definitely won’t unless it moves production to China.
@ Bob
> Li would have to successfully move production from Sweden to China.
Swedish don’t mind if Geely kept open Volvo’s existing Swedish plants while opening new ones in China. Shifting Volvo production from Sweden to China is totally unacceptable to Swedish government.
> Geely definitely won’t unless it moves production to China.
And Swedish government would not approve the sale if it included moving plants to China. Opening new plants in China is fine, but all existing plants in Sweden must be kept open as the term of sale.
Look at what happened to BAIC’s Opel bid; BAIC offered twice as much as Magna and RHJ but was the first to be tossed out, because BAIC’s offer included 3-year German plant closure(the workers would still be on the payroll during the closure) and was tech-transfer heavy to China. Europeans really do fear Chinese and selling to Chinese would be the action of last resort, like MG assets liquidation.
According to press report, Geely is leading at the moment but this could change with a submission of non-Chinese offer for Volvo. That non-Chinese offer would be preferred over Geely even if the offered sum was less than what Geely’s offering.
Deal is backend loaded from Ford Engines & Power trains & some IP items and parts will continue to be supplied from Ford for some 8 years.. JUst because there was a low purchase price doesn’t mean Ford will not get Paid $$$$ for this deal. Ford will become a Major Parts supplier under this arrangement. They get to shed the dealers and the marketing & let Geely-Volvo deal with them & the unions.
Smart move for Ford at this time.. While Ford goes on & becomes Profitable.. Wouldn’t be surprised if Geely can’t make this work then Ford having become profitable in interim years may have 1st option to buy it back..Nothing would surprise me with Ford.