Petrol Stop - China's Geely set to close $1.8 bn Volvo buy

China's Geely set to close $1.8 bn Volvo buy

Monday, 02 August 2010

02 August 2010;economictimes.indiatimes.com:BEIJING/HONG KONG: China's Geely will complete its $1.8 billion purchase of Ford Motor Co's Volvo unit on Monday, a source with direct knowledge of the matter said, capping China's biggest purchase of a foreign car maker. The deal, which would see the privately owned parent of Geely Automobile buy Volvo, in many ways also reflects China's rapid rise on the global auto stage, after it passed the United States last year to become the world's top auto market. The final value of the deal will be around the figure previously announced, although the actual amount could vary depending on exchange rates, said the source, speaking on condition of anonymity pending an official announcement. Geely, which only started making cars in 1986, told Reuters last week that it had received all necessary government approvals for the deal, including from the commerce ministry and the state planner. With the deal now set to close, the real challenge for Geely will lie ahead as it aims to restore Volvo to long-term profits. Volvo Cars posted revenue of $12.4 billion in 2009 by selling 334,000 cars, but it recorded a pre-tax loss of $653 million. Geely's plan includes using the Swedish nameplate to produce luxury brands in China, while maintaining its operations in Europe to supply the international market.