Revised Volvo Pact Better Serves Investors, China’s Geely Says
- Geely opted for new path after working on merger for a year
- Current plan won’t dilute investors in Geely, will save costs
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Geely Automobile Holdings Ltd. Chief Executive Officer Gui Shengyue talked up the decision not to pursue a full merger with Volvo Cars, saying on an investor call Thursday that shareholders’ interests are better served if the two companies remain as standalone entities.
The difficulty of coming up with a fair valuation for Volvo acceptable to both investors in the Chinese carmaker and Volvo is one of the main reasons that led to the change of plan, Gui said. Geely investors wanted a valuation on the lower side and even if Chairman Li Shufu had agreed to that, Sweden’s government and Volvo’s union would have been against it because of the potential damage it could cause to Volvo’s brand, Gui said.