China Buyout Watch: Geely's Turn For Volvo?
Volvo is Latin for “I turn” (as in “revolving credit” of lore, or as in “revolver” for people who can’t get one.) Nomen est omen: Never has the word been truer than now, as the formerly glorious Swedish brand is being offered-up for a gang-bang.
From day one, TTAC chronicled the trials and tribulations of the D2.8 to sell as many brands a possible to the highest bidder. The news cycle on that is predictable. We report it. They deny it. Pom-pom waving bloggers drop their cheer-leading acoutrements for a second, wave the denials, and call us idiots. Shortly thereafter, The Truth About Cars offered to India and China comes out, usually by way of the Indians saying that they don’t have the money, or the Chinese saying that they looked and lost interest. All while Detroit denies that anything of that nature may be going on.
At least, the last part changed. Two days ago, motor-mouth Bob Lutz admitted what he had denied weeks before: GM brands such as HUMMER, Saab, Saturn are on the block. Excuse me, they are “under strategic review.” Yesterday, Ford’s Mulally confirmed what TTAC B&B had known for a while: Volvo is for sale.
Well, of course Mulally didn’t say it so crudely. He said “Ford is considering strategic options, right now,” Reuters reports. What’s with the “strategic options” talk? Are they peddling launch codes for ICBMs? Why is it so hard to say: “We are looking for a buyer?” That’s what you learn on your first day as a salesman: gotta ask for the sale. Maybe, that’s why they aren’t selling. “Boy, do I have a strategic option for you” doesn’t seem to have the right ring to it.
Double-speak or not, Mulally “expects lots of interest in the brand.” Maybe Mulally had one too many, or he was under a lot of stress (waiting for news from DC does that to you,) but his next remarks drifted into never-never land, into the DMZ of strategic options, so to speak: “I think that even though times are tough, there are a lot of people who would love to have that brand. Even though it is tough it’s going to work out okay.”
Isn’t it refreshing when people can verbalize clearly where they stand, strategic options-wise?
As for the lots of people who would love to have that brand, we agree. A lot would love a Volvo. When you bring in the nasty factors of having the money to buy the brand, not to mention an acquisition that makes sense, the number of suitors gets a bit limited. The Europeans have their own problems. The Indians likewise. There is some interest in China, amply documented by TTAC. Prime suspect is Changan in China, who’s stock had been placed on halt pending announcements a day after the story of their interest in Volvo had hit the wires.
The Brit blog Autocar.co.uk doesn’t want to be left out in the Volvo debate. They found their own Chinese car maker who’s supposedly waiting for his turn to do Volvo: Geely.
“Autocar has learned that rival Geely Automobile has shown interest in a controlling stake in the Swedish brand,” they blog. And how did this interest manifest itself? “Geely personnel initially visited Volvo’s headquarters in Gothenburg in early 2008. At the time, Geely was unprepared to pay the $6b that Ford was asking for Volvo. But with Ford insiders now suggesting that Mulally is prepared to offload Volvo at a significantly lower price, talks between the two car makers have restarted.”
If that’s the proof, then it’s old hat.
Gang-bangs can get a bit sticky, and Autocar found a gooey spot: “One of the sticking points for any deal with a Chinese maker is the intellectual property agreements concerning the Ford-based platforms on which Volvos are based. Autocar sources say any buyer would be prohibited from using these platforms for any other brand.”
Not necessarily so, depends on the contract. Many Chinese home-growns are based on a platform bought from abroad. Another wet spot may have been overlooked: Changan. They are in a joint venture with Ford to build Volvos for China, and they are busy expanding their line-up. They may have to be asked what they think of a Geely-Ford-Volvo affair.
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