FILE PHOTO: Volvo’s new electrical automobile Volvo C40 Recharge is introduced in Stockholm, Sweden March 2, 2021. Claudio Breciani/TT Information Company/by way of REUTERS
July 21, 2021
STOCKHOLM (Reuters) – Volvo Automotive Group has struck a deal to purchase out mother or father firm Geely Holding from their joint ventures in China, in a transfer that would make a possible preliminary public providing (IPO) for the Swedish automaker extra engaging to buyers.
Geely mentioned earlier this 12 months it was contemplating choices for Volvo, together with an IPO and inventory market itemizing.
“These two transactions will create a clearer possession construction inside each Volvo Vehicles and Geely Holding,” Geely Holding CEO Daniel Donghui Li mentioned in an announcement, which didn’t check with the attainable IPO.
Analysts anticipate different international automakers to strike related offers in China, the world’s largest automobile market, when the nation’s requirement for auto manufacturing to be carried out with a neighborhood three way partnership accomplice is lifted subsequent 12 months.
Volvo’s deal, monetary phrases for which weren’t disclosed, will give it full possession of its manufacturing crops in Chengdu and Daqing, its Chinese language gross sales firm and its analysis and improvement facility in Shanghai.
The Gothenburg-based firm was purchased by Zhejiang Geely Holding Group from Ford within the aftermath of the worldwide monetary disaster greater than a decade in the past, and has since shared possession of its Chinese language crops with its mother or father.
Volvo mentioned the transactions, that are topic to regulatory approval, could be carried out in two steps, beginning in 2022 and seen formally accomplished in 2023.
Whereas at all times conscious of preserving its standing as premium Western auto model, Volvo’s enterprise in China has grown quickly and assuming full possession of its manufacturing there may make a possible IPO extra interesting to buyers.
Volvo CEO Hakan Samuelsson mentioned in June the corporate was making progress in the direction of a attainable IPO later in 2021, and that whereas it might proceed to share platforms and elements with Geely, they’d achieve this at “an arm’s size distance,” according to the way in which impartial firms do enterprise.
(Reporting by Niklas Pollard; Modifying by Anna Ringstrom and Mark Potter)