China’s Geely Holding Group is expected to finalize a $2 billion offer this week to purchase Volvo from Ford , according to a new report. Meanwhile, Chinese regulators are said to be clashing over Tengzhong’s plan to acquire Hummer from General Motors.
The Volvo deal stems from a January 2007 discussion between Don Leclair, then Ford ’s chief financial officer, and Geely chariman Li Shufu. A year later, Geely got serious about buying Volvo, but Ford decided it would try to restructure the company first. It wasn’t until early this year that Ford and Geely began to seriously discuss a sale.
Geely’s $2 billion offer will likely make it the top bidder for Volvo. A decision on the proposed sale could come in the next several weeks, according to the Wall Street Journal.
Mr. Li’s plan for Volvo, according to the report, is to slash the brand’s costs by taking advantage of lower product development and manufacturing costs available in China.
The proposed purchase of Hummer by Tengzhong is not going as smoothly. China’s economic planning regulator, the National Development and Reform Commission (NDRC), is said to be opposed to the purchase of the gas-guzzling Hummer brand. Meanwhile, the Ministry of Commerce (Mofcom) is more supportive of the plan.
The government of China’s Sichuan province, where Tengzhong is based, is lobbying the NDRC and Mofcom to approve the proposal, which GM has already accepted.
“If Tengzhong wants to set up a factory in China after acquiring the brand … this would require NDRC approval,” analyst Zhang Xin told Reuters. “But based on the current situation, this looks nearly impossible.”
