Geely May Buy Volvo for USD1.8bn at Most

China's Geely Holding Group Co. amd US automobile giant Ford Motor Co. are almost completing the talks about the acquisition of Volvo, and both sides agree to sign the deal on February 8, said sources.

The deal will be worth not more than USD 1.8 billion or even less than USD 1.6 billion, compared with USD 6.45 billion that the US auto giant spent on the purchase of the Swedish automaker in 1999, they added.

Geely will obtain Volvo assets valued at more than USD 1.5 billion in net, disclosed the sources, adding that Chinese regulators, such as the National Development and Reform Commission (NDRC), supported the deal and some Chinese officials would soon head to Sweden to discuss about the support for the deal.

In late 2009, Geely and Ford reached accord upon all the important business issue upon the acquisition of Volvo. The items include the investment plan, operation, management, intellectual property right, and payment mode. But the acquisition is still subject to regulatory approval, and the final settlement is forecast be made in the second quarter of 2010, told earlier reports.

Moreover, a Geely executive confirmed that a Volvo factory would be built in China. Earlier reports even told that the Geely Volvo project would be located in Yizhuang, Beijing.

Analysts guessed that the XC60 would possibly become the first Volvo model that Geely produces in China. The SUV model, graded the same as the Audi Q5 and the BMW X3, became the most popular Volvo product with a global sales volume of 62,000 in 2009.

As for the relationship with Chang'an Ford Mazda Automobile Co., Ltd., a China-based Ford venture, the sources told that Geely would respect the agreement upon the technological cooperation between Volvo and Chang'an Automobile (Group) Co., Ltd. until the agreement expires, and that there would be one year as the transition period.

Previously, in accordance with the strategy of Ford China, Volvo and its Chinese partner Chang'an Automobile joint hands technologically in the production of Volvo S80 and Volvo S40 cars.

The Chang'an Automobile Publicity Manager Zheng Changjiang earlier stressed that Chang'an Ford Mazda would continue the production of Volvo products as an OEM.

According to the earlier contracts, the Chang'an Ford Mazda will not stop the production of the Volvo S40 until 2015 and of the Volvo S80 until 2018, told the manager.

Chang'an Ford Mazda, based in Chongqing, southwest China, is a joint venture among Ford, Chang'an Automobile, and Japan's Mazda Motor Corporation.

(USD 1 = CNY 6.83)

Source: www.163.com (January 25, 2010)

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