Geely has been given the red stamp of approval to go forth and buy Ford’s Volvo, Gasgoo reports. The permit was issued by China’s National Development and Reform Commission, which has to approve foreign acquisitions exceeding $100 million. Gasgoo says that Geely is “the only Chinese automaker that has won official confirmation on such deals.” A thinly veiled hint that the Hummer deal is still up in the air. Changan, Ford’s joint venture partner for Volvo in China, said it would not run for Volvo “because of unspecified conditions,” Gasgoo says. How much money will change hands?
The Wall Street Journal reported in mid-July that Geely was ready to submit an offer anticipated to be around $2 billion. Something must have gotten lost in translation: It wasn’t greenbacks. It was 2 billion red Maos, or Chinese Yuan, the usually reliable China Car Times reports. That comes out to a little less than $300 million.
A few days before the announcement, Geely’s Chairman Li Shufu bought 98 million shares of Hong Kong listed Geely for $129.36 million (US, not Hong Kong $). He now owns 51.54 percent of Geely.
Not so fast, says the Wall Street Journal, which hopefully has its facts and currency rates together this time. Citing a “knowledgeable person,” the WSJ has it that “Ford has decided to wait for General Motors Co. to wrap up its sale of Adam Opel GmbH unit, and is hoping to invite a loser in that two-way bidding race to bid for Volvo.”
The WSJ‘s mystery source says that “three players” are bidding for Volvo: Geely, BAIC, and an unidentified European investment group. Deep throat says Ford expects BAIC to go after Volvo with greater vigor (and more money). Ford also hopes that whoever loses the Opel deal, Magna, RHJ (or both) come after Volvo.
Every seller likes a bidding war. Even if it’s just a wet dream. With Opel, the lucky buyer puts a few hundred million Euros on the table and receives billions of German government Euros, plus a sizable car company. With Volvo, it’s all cash, no government money and a much smaller car company.
Just don’t call it Lenvolvo.
She’s wearing a pretty little Summer sundress that says “Welcome to our party and please enjoy the plum cake!” and he’s wearing a black leather Winter trenchcoat that says “Welcome to our plan for world domination Mr. Bond!”
Whassup with that?
Surely buying stock in your own company shortly before a major event is insider trading?
Does China have the same sort of insider trading rules as other markets? If not, why not?
Although if this doesn’t go through, he’s probably going to take a big loss even though he controls Geely now.
Andrew
Considering Ford’s latest financial report, I don’t think that they can get rid of Volvo fast enough. That’s a big money drain, and if Ford wants to get back to big-time profitability, they need to dump Volvo like a bad habit.
How much will this sale be?
Note to Ford: If someone is offering you money for Volvo, take it!
Andrew: Geely is listed in Hong Kong, and HK has trading rules similar to the UK.
Ford should take even $1 (whether US$, C$, AU$ or HK$) for Volvo if that’s all they can get for it. It’s bleeding money at the rate of nearly $1B per year, and shutting it down would cost a lot, too.
$12B spent on buying Volvo, Jaguar and Land Rover (and an unknown amount on Aston Martin), plus additional billions for ongoing losses. It’s time to stop the bleeding.
I think they should break out the bubbly in Dearborn and cash any check attached to an offer for Volvo immediately. The sooner the Nasser PAG experiment is over the better.
Just Wave Goodbye!
Seems to be short memory syndrome here: remember when Volvo was the ONLY manufacturer under the Ford umbrella to be turning a profit? Do you think Ford products would be so highly regarded presently if they were not incorporating Volvo technology?
It depends on how the technology and patent transfers will work. If ford will retain ownership of above and receive licensing fee’s (kindof like Renault and AV), then yeah go ahead and get rid of it for what you can get. If those things go to the buyer free to use then Ford would be crazy to provide to a Chinese manufacturer that could bring a NA & EU standard car to market in a matter of years without receiving atleast significant compensation.
Thinking short term is what got the D3 into so much trouble in the first place. If the losses are managable (and I imagine part of Volvo’s loss this quarter was Ford writing down “good will” associated with so that they could show more gain when they do sell in future Q), then they would be wise to wait for a buyer that provides the best long term benefits.
Rod Panhard- LOL
Thanks. Plumcake indeed.
sixteengun : Do you think Ford products would be so highly regarded presently if they were not incorporating Volvo technology?
Aside from the sorely needed head rest redesign across the board (a real Volvo headrest instead of sandwich wrap looking things), I am not buying it. The D3 Chassis? Total money vacuum and everyone knows it.
Blind spot detection and self-parking? Cool gadgets that might entice a few people into a $55,000 Lincoln MKS. But I’m not seeing much value added here.
I don’t think it’s a coincidence that the Ford Focus just won top safety pick by the IIHS. The other top pick? The Volvo C30.
There’s more going on behind the scenes here (apparently) than BLIS and self-parking systems methinks.
http://www.iihs.org/news/rss/pr072109.html
Isn’t the Euro Focus, Mazda3 and S40 penned from the same chassis? That was a winner by all accounts.
Don’t forget the perceived safety trickle down by being associated with Volvo.
RSC=Volvo
Ford 500 was based on Volvo S80
Look for the same technology as new XC60, (the car that stops itself), to appear on Ford in the near future, should I keep going?
Finally, the NEW TAURUS, do you think there are any similarities to the present Volvo S80 that debuted as a 2007 model?
Collision warning with brake support-think Volvo 2010 XC60
Adaptive cruise control- Volvo 2007 S80
As long as Ford owns Volvo, whatever technology that comes out of Sweden, is Ford property. After the sale? It remains to be seen where “Ford Innovation” and safety will originate.
Keep Going?
Stop the bleeding by removing the heart? unconventional…but
Exactly right, sixteengun.
Ford needs Volvo; they should move Volvo production out of Europe to somewhere cheaper (southern US perhaps) and then drop their prices. I know many people with kids who want a Volvo but either can’t afford one or think (correctly) that they are overpriced.
@Sajeev, I think that the D3 platform wasn’t so bad when Volvo introduced it in 1999. Trouble is that nobody (Ford or Volvo) has bothered to do anything substantial with it since then. Now Ford and Volvo are introducing new models on a platform more than 10 years old …
th009:
P2-platform introduced in 1998 as 1999 S80,
includes S60, V70, XC70, XC90. The only P2 still currently assembled is XC90.
P1-platform introduced as 2004 1/2 model, now includes C30, C70, S40, V50
P3-2007 and later S80, 2008> V70 & XC70, 2010> XC60. Have not done anything with it?????