Shares in Geely Automobile Holdings surged nearly 5% on March 29 Monday after its Chinese parent company sealed a $1.8 billion deal to buy Volvo Cars from Ford.
"It is a comprehensive acquisition," said Jerry Huang, a Shanghai-based analyst with automotive research firm CSM Worldwide. "Volvo will get funds which it needs badly at the moment and a market that has enormous potential. Geely gets a platform to learn and gain experience in the industry."
The deal signed on March 28 ended more than a decade of Volvo ownership by Ford Motor Co., which saw the upmarket Swedish carmaker become a loss-making thorn in the side of t Ford.
Geely chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest-growing car markets in the world.
"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger," he told a press conference after the deal was signed at Volvo Cars headquarters in Gothenburg, southern Sweden.
"The tiger has a heart and it lies in Sweden, (and) in Belgium but its power should be projected all over the world.
"I see China as one of the markets where Volvo can show it has the opportunity to liberate itself," he said.
Geely said it had not only secured financing for the $1.8 billion it was paying, but was also eager to keep Volvo in operation.
It also said the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.
Copyright Agence France-Presse, 2010