“Geely is becoming a full-range transportation company.”
It’s been about a decade since Geely bought Volvo from Ford, at a time when the American firm was on the brink of financial collapse, and the Swedish company was flailing with lacklustre cars thanks to incongruous parts-sharing. However, with a fat bank account and near-limitless freedom to explore the very furthest reaches of their engineering talent, Volvo’s gone from nearly-dead to thriving, giving parent company Geely more credibility (and healthier coffers) with which to go forth and expand its portfolio.
After concluding a deal with Malaysian industrial conglomerate DRB-Hicom to purchase part of PROTON and the majority of Lotus, Geely’s now broken into the heavy-vehicles market with its purchase into AB Volvo, reports Automotive News Europe. Geely secured a 8.2% stake in the venture, equivalent to 15.6% of votes, making them the biggest single shareholder in the partnership.
“Given our experience with Volvo Car Group, we recognise the value and proud Scandinavian history and culture, leading market positions, breakthrough technologies, and environmental capabilities of AB Volvo.” — Li Shufu, Chairman, Geely Holdings
The deal is said to have cost the Chinese company somewhere around US$3.3-billion (or $4.23-billion). AB Volvo, aside from its namesake marque, also owns 45% of Dongfeng Commercial Vehicles, one of China’s largest truck makers, as well as other heavy-vehicle marques like Mack, UD, and Renault Trucks. Geely purchased its stake in AB Volvo from activists investor Cevian Capital, with Nomura International and Barclays Capital acting as escrow while the transaction awaits necessary regulatory approval.
This comes after Geely successfully negotiated a 49% stake in Malaysian carmaker PROTON, as well as a 51% stake in British sports car manufacturer Lotus.
“Geely is becoming a full-range transportation company, and seems to be defining itself as a company that moves people and things. Any device that does this, is on their radar.” — Bill Russo, Managing Director, Gao Feng Advisory
Since announcing its 5% holding of AB Volvo in 2006, former owners Cevian Capital’s Class B stock in the company has returned 181% in the past 11-years, inclusive of dividends. It’s estimated that Cevian earned as much as US$2.4-billlion (or $3.08-billion) in total during that period.
Stay tuned to CarShowroom as we bring you more updates as they come.