Geely to Offer Final $2 Billion Bid for Volvo

SHANGHAI - July 16, 2009: Geely Holding Group Co. is expected to submit a final bid by later this month with an offer anticipated to be around $2 billion, according to people familiar with Geely, The Wall Street Journal reported.

The private Chinese automaker has been working for almost three years on its takeover plan for Volvo, key elements of which people familiar with the plans described to The Wall Street Journal. Geely is bidding at the parent company level, not through its Hong Kong-listed unit Geely Automobile Holdings Ltd.

The company has hired consultants to advise it, including Peter Zhang, a financial controller from BP PLC, and he tapped Hans-Olav Olsson, Volvo's former top executive. It has also appointed a veteran Chinese finance executive to spearhead the effort. Geely reconfirmed its interest in Ford Motor's Volvo unit in March.

Geely would use Chinese engineers -- including graduates from four engineering colleges the company set up in cities around China -- to conduct basic engineering tasks like generating digital blueprints of parts designed by more seasoned engineers in Sweden. A main goal would be to make and sell more Volvos in China.

Ford management, initially skeptical of Geely's bid, now believes the Chinese company could successfully run Volvo, say people familiar with the situation. Geely Chairman Li Shufu has thus far refused to discuss his plans for Volvo publicly. For unknown reasons, both Ford and Geely denied news reports last month about their Volvo deal.

Mr. Li's vision for Volvo is to radically slash the Swedish brand's costs for product-development and manufacturing by tapping the relatively cheap labor available in China. He doesn't plan to merge Volvo and Geely: Volvo would remain as an independent brand and retain its current management team.