Shares in Geely Automobile Holdings surged nearly five percent Monday after its Chinese parent company sealed a 1.8-billion-dollar deal to buy Volvo Cars from US auto giant Ford. The Hong Kong-listed unit of Zhejiang Geely Holding Group rose as much as 4.9 percent to 4.30 Hong Kong dollars (0.55 dollars) before closing at 4.16, up 1.5 percent in a stronger market.
The broader market finished 0.88 percent higher at 21,237.43. "It is a comprehensive acquisition," said Jerry Huang, a Shanghai-based analyst with automotive research firm CSM World-wide. "Volvo will get funds which it needs badly at the moment and a market that has enormous potential. Geely gets a platform to learn and gain experience in the industry."
The deal signed Sunday ended more than a decade of Volvo ownership by Ford Motor Co, which saw the upmarket Swedish carmaker become a loss-making thorn in the side of the US giant, which is burdened with its own woes. Geely chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest-growing car markets in the world.
"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger," he told a press conference after the deal was signed at Volvo Cars headquarters in Gothenburg, southern Sweden. "The tiger has a heart and it lies in Sweden, (and) in Belgium but its power should be projected all over the world. "I see China as one of the markets where Volvo can show it has the opportunity to liberate itself," he said.
Geely said it had not only secured financing for the 1.8 billion dollars it was paying, but was also eager to keep Volvo in operation. It also said the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.