Volvo Bid: A Wreck For Geely?
2009年3月4日
If Chinese auto makers are truly poised to snap up struggling Western brands, the mooted maiden deal isn't much of a start.
Geely Holding Group is preparing to bid for Volvo, the struggling Swedish firm owned by a similarly troubled Ford Motor Co. And Geely, China's 10th-largest auto maker by sales, may find itself competing against another Chinese company.
The prospect of a bidding war for the likes of Volvo, Saab and Opel should please financially strapped sellers such as Ford. But emulating Geely's pursuit of Volvo won't necessarily be as beneficial to Chinese predators or their potential prey.
Volvo is now worth half the $6.4 billion Ford paid 10 years ago, analysts say. A hard-nosed Geely could offer half as much again. Even at $1.5 billion, Volvo is a big bite for privately owned Geely. It has little international experience, and a work force only a third as large as Volvo's; the listed Geely Automobile Holdings unit has a market capitalization of about $500 million.
Even if Geely could make the numbers add up, Volvo's no prize. It made a $1.5 billion pretax loss last year and a 26% drop in sales. Citi Investment Research says it has a $3.5 billion outstanding loan from Ford and needs substantial investment over the next five years.
Why is Geely bothering?
The upscale Volvo brand and its car-safety technology would jumpstart an image makeover for Geely, whose products have a reputation for poor quality. Shifting production to China from Sweden might reduce costs and improve the acquisition numbers. Geely Chairman Li Shufu's international ambitions would be enhanced.
A multicultural personnel integration would be difficult; Daimler's Chrysler fiasco shows how tough these projects can be. Another risk: Volvo could lose some of its high-quality, safety-first luster in the arms of a Chinese owner.
There is little positive precedent for Chinese automotive escapades overseas: South Korea's Ssanyong, bought by Shanghai Automotive in 2004, is now in receivership.
Wary of foreign acquisitions outside the favored resources sector, Beijing is probably unenthusiastic about a Geely offer. Geely itself might do well to hope an eventual bid fails.
Andrew Peaple
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