China enters big league as Geely acquires Volvo

China's Geely completed the US$1.5 billion ($2.05 billion) acquisition of Volvo from Ford yesterday, catapulting a Chinese car maker into the global league for the first time.

Fresh from the signing ceremony with Ford's chief financial officer Lewis Booth in London, Geely's chairman Li Shufu was with Manganese Bronze for talks about Geely taking control of the London taxi-maker.

The Volvo deal was sealed with US$1.3 billion in cash and a US$200 million loan note - slightly lower than the US$1.8 billion price agreed in March because of "adjustments" in pension obligations and working capital, Geely said.

Ford said it expected further proceeds following a "true up" later in the year.

The deal is the first takeover of a premium global car brand by a Chinese company.

Li described the deal as "a historic day for Geely", and pledged to maintain Volvo's identity.

The marque will keep its Gothenburg headquarters, its factories in Sweden and Belgium, and its use of parts and engines from Ford.

Stefan Jacoby, the former boss of Volkswagen America, is taking over as Volvo chief executive.

Geely is one of China's largest car companies. But while the booming Chinese market became the world's biggest last year, the industry is fragmented: Geely sold just 330,000 cars in 2009, the same as Volvo.

The group plans to use vast Chinese demand to double Volvo sales, while using the Swedish group's technology, dealership network and global brand to push Geely outside China.

Geely already owns 23 per cent of Manganese Bronze, and has been in talks since March about raising its stake to 51 per cent.

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