Geely Shares Rise After Ford Confirms Volvo Bid

As it was to be expected, yesterday's official announcement that Chinese holding group Geely is the preferred bidder in the race for Volvo made all the difference for Geely Automobile, the automotive division of the holding. Its shares rose by as much as 4.5 percent, the highest value ever since the company was listed in 2004.

Questions about Geely's ability to handle Volvo however still remain. On the one hand, there are the skeptics, on the other there's Ford.

"I think the market is still divided on the Geely deal," Chen Qiaoning, analyst with ABN AMRO TEDA Fund Management was quoted as saying by Autonews. "If its parent indeed gets Volvo and the deal serves it well, the listed firm would benefit tremendously. But if they are unable to handle Volvo ... the listed company will suffer."

“Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand," Lewis Booth, Ford Motor Company executive vice president and chief financial officer said yesterday.

The bid is being made by Zhejiang Geely, but so far the financial details behind the projected deal are not known. Speculation is Volvo will be sold for about $2 billion, far less then the money paid by Ford when it took over in 1999.

As for Geely, the company which repeatedly denied taking any interest in Volvo says it has done all it can do.

"We have made great effort and are well prepared. But whether the deal will go through depends entirely on the negotiation," Yuan Xiaolin, a spokesman for Zhejiang Geely was quoted as saying by Reuters.