Geely clears final Volvo hurdle
2010-07-30 11:42
The privately held parent of China's Geely Automobile said on Friday it had received the nod from China's state planner for its purchase of Ford's Volvo unit, a critical step for its plans to turn around the Swedish carmaker.
"We have received all approvals required from the central government," Ning Shuyong, spokesman for Zhejiang Geely, told Reuters. "We are currently working on closing the deal."
A source previously told Reuters that Geely had received approval for the purchase from China's commerce ministry, which must give the green light for all major overseas mergers and acquisitions.
But approval from the National Development and Reform Commission (NDRC), China's state planner, was also seen as mandatory, as the body must approve any major new investments in China. Ning confirmed that both the commerce ministry and the NDRC had signed off on the deal.
Major new investment is a critical part of Geely's plan to turn Volvo around, which includes building a new manufacturing facility in China that would nearly double the Swedish carmaker's capacity to take advantage of China's vast auto market.
Geely has said it is prepared to pump up to $900 million in capital into Volvo, which would be on top of $1.8 billion that Geely will pay Ford for the carmaker.
Geely's plan to turn around Volvo includes using the Swedish nameplate to produce luxury brands in China. A number of Chinese cities, including Beijing, Shanghai and Chengdu, are courting the firm for the manufacturing site, but no decision has been made so far.
Ning would not comment on a timetable for closing the deal, after other sources said it could officially conclude as early as next week.
