Sources say that Geely Automobile Holdings and wholly owned Swedish marque Volvo cars are holding preliminary talks to explore the possibility of a re-organization through a merger, with plans to list in Hong Kong and Sweden, Yicai Global reported.
Geely, its sub-brand Lynk, Volvo, and the duo’s joint marque Polestar would remain independent brands following a merger, Geely said, adding that the move would form a global group with more cost-effective tech development to tackle future challenges, the report said.
The new group would initially seek access from the global capital market in Hong Kong and then look at listing in Sweden, according to the statements, though neither disclosed detailed plans or a specific timetable, the report said.
Volvo, a brand highly regarded for its safety, has changed hands multiple times.
American auto titan Ford picked the struggling firm up in 1999 and in 2010 sold it on to Geely, who took a 100% stake for US$1.8 billion and has been turning the company on its head. The firm made SEK14.3 billion (US$1.5 billion) in profit last year, up 0.8% annually, while operating income jumped 8.5% to SEK274 billion, the report saqid.
The brand sold 705,000 cars worldwide last year, up 9.8% and passing the 700,000 milestone for the first time since it set up shop in 1993 while marking six straight years of record-high sales, the report said.
Volvo also shifted more than 150,000 cars on the Chinese mainland for the first time, despite an industry-wide slump as the world’s largest car market slipped for the second straight year after more than two decades on the up, the report said.
The union would be an equal merger, Geely said in a circular to employees. The pair would set up a joint work team coordinated by Volvo chief executive Hakan Samuelsson to evaluate the opportunity, propose the merger terms and present it to each company’s board for review, it added.