Li Shufu (center), chairman of Zhejiang Geely Holding Co, arrives for a news conference in Beijing earlier this year. The Geely-Volvo deal has won approval from the Chinese government. [Nelson Ching / Bloomberg News]
Automaker expected to complete takeover of Swedish luxury car
BEIJING - Zhejiang Geely Holding Group Co is expected to complete it takeover of Swedish luxury car brand Volvo from US automaker Ford Motor Co on Monday after getting government approval for the deal.
Ministry of Commerce officials told China Daily on Thursday that the government cleared the Volvo deal on Monday 26, after the National Development and Reform Commission cleared the proposal last week.
Geely has also got the necessary anti-trust approvals from the European Union and the US government for the deal.
"With this the decks are now clear for Geely to complete its acquisition of Volvo and start manufacturing the brand in China," said Wang Zhile, director of the research center on transnational corporations under the Ministry of Commerce.
Yuan Xiaolin, Geely's spokesman for the Volvo deal was unavailable on Thursday for comment. However, unnamed sources from Geely told China Daily that the Zhejiang-based automaker will hold a formal function on Monday to complete the deal.
Geely's shares surged nearly 11.32 percent and closed at HK$2.95 per share in Hong Kong on Thursday.
Privately owned Geely paid $1.8 billion to acquire the Volvo car brand from Ford on March 28 this year. It was the biggest overseas deal made by Chinese automakers in recent times.
Geely Chairman Li Shufu had at that time indicated that the company would invest $900 million as operating capital in Volvo apart from the $1.8 billion purchase price.
Geely said on July 15 that it had appointed Li as the chairman of the board at Volvo Car Corp. At the same time it appointed the former president and CEO of Volvo Hans-Olov Olsson as the vice-chairman.
More appointments to the board and top management, including the chief executive and chief financial officer, may be made next week, said sources.
Analysts said the Volvo buy will help Geely gain a competitive edge in China and also a major toehold in Europe.
Pursuant to completion of the deal, Geely is likely to start making Volvo cars locally.
Though it has not announced a location yet, indications are that it may consider Jiading in Shanghai, Chengdu in Sichuan, Beijing or Tianjin as possible production sites.
During the firsts six months of the year, Volvo sold 15,497 cars in China, up 88 percent over last year.
That compares to the Swedish luxury brand's 5.2 percent and 9 percent year-on-year decline in major markets like the United States and Germany.
Geely plans to increase Volvo's annual sales in China to 150,000 units by 2015, said sources.