Volvo Cars takes full control of its Chinese operations
STOCKHOLM, July 21 (Reuters) – Volvo Car Group has reached an agreement to buy parent company Geely Holding from their joint ventures in China, a move that could make a possible initial public offering (IPO) for the Swedish automaker more attractive to investors .
Geely said earlier this year that he was considering options for Volvo, including an IPO and listing.
“These two transactions will create a clearer ownership structure within Volvo Cars and Geely Holding,” Daniel Donghui Li, CEO of Geely Holding, said in a statement, which made no reference to a possible IPO.
Analysts expect other foreign automakers to make similar deals in China, the world’s largest auto market, when the country’s requirement for auto manufacturing to be completed with a local joint venture partner is lifted. next year.
Volvo’s deal, the financial terms of which were not disclosed, will give it full ownership of its manufacturing plants in Chengdu and Daqing, its Chinese sales company and its research and development center in Shanghai.
The Gothenburg-based company was bought by Zhejiang Geely Holding Group (GEELY.UL) from Ford (FN) in the aftermath of the global financial crisis more than ten years ago, and has since shared ownership of its Chinese factories with its parent company.
Volvo said the transactions, which are subject to regulatory approval, will be completed in two stages, starting in 2022 and officially ending in 2023.
Always keen to preserve its status as a premium Western automotive brand, Volvo’s business in China has grown rapidly and full ownership of its production there could make a potential IPO more attractive to investors.
Volvo CEO Hakan Samuelsson said in June that the company is moving towards a possible IPO later in 2021, and that while it would continue to share platforms and components with Geely, they would do so at ” an arm’s length “in accordance with the way independent companies do business.
Reporting by Niklas Pollard Editing by Anna Ringstrom and Mark Potter
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