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Geely Automobile’s shares surge as it scraps full merger to pursue watered-down combination with Volvo Cars
- Both parties have now agreed to an equity merger of their powertrain operations and will jointly develop electric vehicle platforms
- It comes a year after the China’s Geely held talks with the Swedish luxury automaker for ‘possible restructuring’ to realise synergies in cost structure and new technology development
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Geely Automobile jumped by the most in nearly three weeks in Hong Kong after the Chinese automaker called off a merger plan with Volvo Cars, to focus instead on collaboration in some parts of its manufacturing unit.
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Its shares climbed as much as 4.8 per cent to HK$27.15 before trading at HK$26.65 at 2.30pm local time. They had declined in the previous six trading days to the lowest level since December 30.
Both parties have now agreed to an equity merger of their powertrain operations, according to an exchange filing late on Wednesday. They will also conduct joint development of electric vehicle platforms, technology sharing and joint procurement, it added.
“The deeper collaboration will enable existing stakeholders and potential new investors in Volvo Cars and Geely Auto to value their respective standalone strategies, performance, financial exposure and returns,” it said. “We will also have the opportunity to explore capital market options.”
The switch to a watered-down approach came a year after the Zhejiang province-based Geely held talks with the Swedish luxury automaker for “possible restructuring” to realise synergies in cost structure and new technology development while preserving their individual brands including Lynk & Co and Polestar.
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Zhejiang Geely Holding Group, controlled by Chinese tycoon Li Shufu, owns 97.8 per cent of Volvo Cars and 40.9 per cent of Geely Auto. The group also owns 9.7 per cent of German carmaker Daimler.
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