Its a world of mergers and alliances. First, Suzuki-Toyota, then Fiat-Peugeot and now Geely-Volvo. The latter has announced that they are considering a merger. This merger, will accelerate financial and technological synergies between the two companies, according to a statement shared by Volvo. Geely owns a 99 per cent stake in Volvo, with the rest owned by a few Swedish investors. It is being said that the thought process is to have a combined company . This will give them access to the global capital market through Hong Kong, with the intention to subsequently list in Stockholm as well. A joint proposal will be created by the respective companies to list out details of the merger.
The issued statement further adds that Volvo, Polestar, Geely and Lynk & Co. will maintain their individual identities. This means there will not be any Chinese influence on Volvo products in the future as well. There will be shared synergies for sure, which in short means powertrains as well as few components.
“A combination of the two companies would result in a strong global group. We look forward to working with Håkan Samuelsson, president and CEO of Volvo Cars, to further investigate this opportunity with the goal to strengthen the synergies within the Group while maintaining the competitive advantage and the integrity of each individual brand,” said Li Shufu, chairman of Geely Holding Group.
Moreover, a transaction will likely be carried out in compliance with the rules mentioning the Security Listing on The Stock Exchange of Hong Kong Limited. This will be subject to a mutually agreed terms and conditions, approvals of the respective boards and shareholders of Geely and Volvo Cars, regulatory approvals and prevailing market conditions.
Does this affect the Indian car market? It might. For the longest time, Volvo was considered Swedish. We have seen how people react to companies like MG and the like. Whether they will look at Volvo in the same fashion, remains to be seen.