China gov't approves Geely acquisition of Volvo

[July 29, 2010]  BEIJING (AP) -- Geely Holding Group has received final Chinese government approval to acquire Volvo Cars from Ford Motor Co., the Commerce Ministry said Thursday.

Commerce officials approved the $1.8 billion deal Monday, said a ministry spokesman contacted by phone who refused to give his name. He said other agencies already have signed off on it.

"This was the final stage of the government approval," he said. "There are no conditions attached."

Geely agreed in March to buy Volvo in China's biggest foreign acquisition in the auto industry. It would give one of China's small but ambitious auto makers access to a prestigious brand and top-tier technology.

European Union regulators approved the deal in early July.

A Geely spokesman, Ning Shuyong, declined to confirm whether the approval process was complete or give details of the status of the acquisition.

"Everything is developing according to plan," Ning said by phone from the company's headquarters in the eastern city of Hangzhou, south of Shanghai.

Beijing has been encouraging Chinese companies to expand abroad, taking advantage of the global financial crisis to acquire assets at lower prices.

Industry analysts say doubt hangs over whether 13-year-old Geely can make a success of Volvo, a money-losing manufacturer on another continent.

"The uncertainty here lies on the differences of the two companies and Geely's lack of experience," said Xing Haizhi, an auto analyst for Cinda Securities in Beijing.

Privately owned Geely has built a business selling cars, motorcycles and scooters with little government support.

The deal could give Geely an edge in China, which is the world's biggest auto market and one in which foreign brands often dominate. It will also gain its first major foothold in Europe.

Volvo would be the last of Ford's European units to be sold off as the company focuses on its Ford, Lincoln and Mercury brands.

Ford sold its Jaguar and Land Rover brands to India's Tata Motors Ltd. in June 2008 for $1.7 billion.

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Online:

Chinese Ministry of Commerce (in Chinese):
http://www.mofcom.gov.cn/

Geely Auto: http://www.geely.com/

[Associated Press]

Associated Press researcher Bonnie Cao contributed to this report.

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