HANGZHOU, Zhejiang – Zhejiang Geely Holding Group Co., Ltd., the largest privately owned automaker in China, was named as the preferred bidder by Ford for Volvo Car Corporation on October 28, according to an announcement from Geely.
Geely will then embark on further detailed discussions with Ford, paving the way for the independence of the Swedish brand after Volvo is purchased.
In the past months, Geely and Ford conducted a number of negotiations for the Volvo deal, and Geely’s acquisition of Volvo is supported by Chinese banks.
Under the proposed transactions, Volvo’s existing production and R&D facilities, union agreements and dealer networks would be maintained, and with help from Geely, Volvo’s access to sales networks and sourcing opportunities in the Chinese market would be enhanced. In the future Volvo would be led by an independent management team and its headquarters would still be in Gothenburg.
“We are delighted with the progress of our negotiations with Ford. Should a final agreement be reached, Geely will safeguard and strengthen Volvo’s world-renowned brand heritage, ensuring its continued leadership as a premium car company with a global reputation for safety and environmental technologies,” sai Li Shufu, chairman of Geely.
If the deal is agreed, Volvo’s presence in China would be strengthened, and major new opportunities and synergies in all business aspects for Volvo in this rapidly expanding and largest market in the world would be created.
“This is an important strategic step for Geely, signaling our commitment to enhance Volvo’s presence in more than 100 markets around the world. The acquisition of Volvo will also help further increase our strength in the Chinese auto industry,” Li continued.
The Chinese central government already gave Geely the nod in August to buy the stricken automaker Volvo from its current owner Ford.
A Goldman Sachs Group-managed private equity fund also poured about $250 million in Geely in September to support Geely’s ambitious expansions.
Geely has been shifting its strategy from an economy car producer to a multi-brand and high-end car manufactuer. At Auto Shanghai 2009, Geely unveiled its Gleagle brand for volume, entry-level cars, Emgrand for luxury cars, and Shanghai Englon for prestige cars.
In the first nine months of this year, Geely sold 217,330 vehicles, up 42 percent year-on-year, according to Geely Holding’s financial statement.