Chinese Government OKs Geely's Volvo Buy. Ford Plays Hard to Get

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Th009 Th009 on Jul 30, 2009

    @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 ...

  • Sixteengun Sixteengun on Jul 31, 2009

    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?????

  • Socrates77 They're pinching pennies for the investors like always, greed has turned GM into a joke of an old corporate American greed.
  • Analoggrotto looking at this takes me right back to the year when “CD-ROM” first entered public lexicon
  • Alan My comment just went into the cloud.I do believe its up to the workers and I also see some simplistic comments against unionisation. Most of these are driven by fear and insecurity, an atypical conservative trait.The US for a so called modern and wealthy country has poor industrial relation practices with little protection for the worker, so maybe unionisation will advance the US to a genuine modern nation that looks after its workers well being, standard of living, health and education.Determining pay is measured using skill level, training level and risk associated with the job. So, you can have a low skilled job with high risk and receive a good pay, or have a job with lots of training and the pay is so-so.Another issue is viability of a business. If you have a hot dog stall and want $5 a dog and people only want to pay $4 you will go broke. This is why imported vehicles are important so people can buy more affordable appliances to drive to and from work.Setting up a union is easier than setting up work conditions and pay.
  • El scotto I can get the speedometer from dad's 72 Ford truck back. I can't get dad back.
  • El scotto BAH! No dividers in the trunk for bags of onions or hooks for hanging sardines! Hard Pass.