Geely Merges Volvo
Introduction
After a one-year long and difficult negotiation, on March28 2010, the China Geely Group went where no Chinese auto firm has gone before, buying a luxury car brand, Volvo, for $1.8billion from Ford, including the 100% shareholder and the relevant assets. It was China's largest overseas automotive industry acquisition, which was also the first wholly-owned merger. Besides, it was the first time for a Chinese own brand to merge a luxury brand. This deal proved to be a most ambitious action for the Chinese automaker’s desire to transform itself into an international auto player and wrote a new chapter for the Chinese automotive industry.
The deal was greeted with cautious optimism by some experts, saying the move offered a bright future to both buyer and seller, which provided them with long term strategic benefits. Geely sought to tap China's high-growth auto market by acquisition to upgrade its car lineup, while Volvo tried to gain more profit in the Chinese market. On the contrary, it is commented that Geely had eyes bigger than its stomach, it was an asymmetric merger. Just as the words of chairman of Geely, Li Shufu, described the deal as the “poor boy from the countryside” (Geely) marrying the “rich girl from the city” (Volvo).No matter what the comments are, securing such a successful acquisition serves as a high standard for other companies to follow and to learn from the experiences and skills gained. Under the background of post-financial-crisis, the Chinese corporations get more opportunities to be players in the international market. Moreover, the Chinese mode, with strong support from the government, may help more firms participate in the international competition.
This article will analyze the factors that contributed to the successful merger between Geely and Volvo from three different perspectives, Geely’s, Volvo’s and some external reasons, which would give an example for other merger.
Evaluate the factors from Geely’s
After a one-year long and difficult negotiation, on March28 2010, the China Geely Group went where no Chinese auto firm has gone before, buying a luxury car brand, Volvo, for $1.8billion from Ford, including the 100% shareholder and the relevant assets. It was China's largest overseas automotive industry acquisition, which was also the first wholly-owned merger. Besides, it was the first time for a Chinese own brand to merge a luxury brand. This deal proved to be a most ambitious action for the Chinese automaker’s desire to transform itself into an international auto player and wrote a new chapter for the Chinese automotive industry.
The deal was greeted with cautious optimism by some experts, saying the move offered a bright future to both buyer and seller, which provided them with long term strategic benefits. Geely sought to tap China's high-growth auto market by acquisition to upgrade its car lineup, while Volvo tried to gain more profit in the Chinese market. On the contrary, it is commented that Geely had eyes bigger than its stomach, it was an asymmetric merger. Just as the words of chairman of Geely, Li Shufu, described the deal as the “poor boy from the countryside” (Geely) marrying the “rich girl from the city” (Volvo).No matter what the comments are, securing such a successful acquisition serves as a high standard for other companies to follow and to learn from the experiences and skills gained. Under the background of post-financial-crisis, the Chinese corporations get more opportunities to be players in the international market. Moreover, the Chinese mode, with strong support from the government, may help more firms participate in the international competition.
This article will analyze the factors that contributed to the successful merger between Geely and Volvo from three different perspectives, Geely’s, Volvo’s and some external reasons, which would give an example for other merger.
Evaluate the factors from Geely’s
References: 1. NORIHIKO, SHIROUZU. (2011) Chinese Begin Volvo Overhaul. The Wall Street Journal, 7th June, p.1 2 3. CJ, Sandersfeld. (2010) Geely acquisition of Volvo underscores dynamics of China 's global business policy. [National]. 31th March. Available from: http://www.examiner.com/international-politics-in-national. [Accessed 28/08/2011] 4 5. Liang Fei. (2011) Volvo opens new China headquarters. [Global Times]. 25th January. Available from: http://msn.huanqiu.com/bizchina/2011-01/1458529.html.[Accessed 28/08/2011]. 6. Geely. (2011) [online image]. Accessed from: www.geely.com. [ 2 ]. CJ, Sandersfeld. (2010) Geely acquisition of Volvo underscores dynamics of China 's global business policy. [National]. 31th March. Available from: http://www.examiner.com/international-politics-in-national. [Accessed 28/08/2011] [ 3 ] [ 4 ]. Liang Fei. (2011) Volvo opens new China headquarters. [Global Times]. 25th January. Available from: http://msn.huanqiu.com/bizchina/2011-01/1458529.html. [Accessed 28/08/2011] [ 5 ]