UPDATE 1-China state planner positive on Geely’s Volvo buy

* NDRC says has questions on deal funding, unions

* “Attitude is positive” if Geely can address questions
(Adds background)

By Fion Li

BOAO, China, April 10 (BestGrowthStock) – China’s state planner said
it is leaning in favour of approving a landmark $1.8 billion deal
for Zhejiang Geely, China’s top private carmaker, to buy Ford
Motor’s (F.N: ) money-losing Volvo unit.

The deal, which was reached last month, must be approved by
China’s National Development and Reform Commission, the country’s
state planner, and the Commerce Ministry before it can close.

The NDRC had a positive attitude toward approval of the deal,
NDRC Vice-Chairman Zhang Xiaoqiang told reporters on Saturday at
the Boao Forum on the tropical southern Chinese island of Hainan.

“Personally I think as a private enterprise, after years of
hard work, coming to a deal to acquire Volvo was not an easy
task,” he said. “However there could be pressure on funding,
problems arising from cultural collaboration and relationships
with unions. If they can answer these queries, I think the NDRC’s
attitude is positive.”

Zhejiang Geely Holdings Group, parent of Hong Kong-listed
Geely Automobile (0175.HK: ), said last month it would pay Ford
$1.8 billion and provide another $900 million in working capital
for Volvo, in the biggest-ever purchase of a foreign carmaker by
China’s fast-growing auto sector.

In an earlier proposal, Geely had said a key to turning
around the loss-making Swedish carmaker would be to significantly
increase its scale, including construction of a major new
manufacturing base in China. [ID:nTOE62S038]

Such major investments must be approved by the NDRC, while
the Chinese Commerce Ministry would need to approve the deal
itself.

Failure to win similar approvals was behind the sinking of
another major deal that would have seen Sichuan Tengzhong Heavy
Industrial Machinery Co, an obscure heavy machinery maker buy
GM’s [GM.UL] money-losing Hummer brand earlier this year.
[ID:nN24166804]

But industry watchers believe the Geely deal has a much
better chance for approval, as Volvo is seen as a better global
brand and Geely is believed to have vetted the proposal with
regulators before reaching its agreement with Ford.

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UPDATE 1-China state planner positive on Geely’s Volvo buy