Ford has agreed to sell Volvo Cars to Zhejiang Geely Holding for $1.8 billion, making it the largest acquisition to date of an overseas carmaker by a Chinese company. The consideration was $1.6 billion in cash and the remainder in the form of a loan note. The deal, which is expected to be completed in the third quarter of 2010, is subject to the approval of regulatory authorities.
Geely, which is the largest private carmaker in China, founded its car division in 1997. The company operates plants in China, Ukraine, Russia and Indonesia, and has a workforce of about 11,000, making models such as Geely FC, MK and LC.
Geely also recently took a controlling interest in Manganese Bronze, which manufactures black London taxis. It is now one of the leading players in the car industry.
Geely had said that it would retain plants in Sweden and Belgium to manufacture most of the cars, so no job losses should result from the deal (some 19,000 people are employed at Volvo worldwide). A new plant is being built in China which is capable of producing 300,000 cars a year. Volvo sold 324,000 cars in 2009 but Geely is hoping to sell an extra 200,000 cars a year in China, which is now the world’s leading car market.
The chairman of Geely, Li Shufu, said: “I see Volvo as a tiger. The tiger belongs to a forest; it can’t be found in a zoo. We need to liberate this tiger. 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.”
It is to be hoped that the tiger retains its status as one of the more important animals in the forest and that it is not being introduced to an environment which precipitates its extinction…
Share