An insignificant Chinese automobile firm, Geely, buys out a famous but ailing Swedish major, Volvo. Can it pass the tough test of getting Volvo back on track?

If the cliché `opposites attract' is true, the marriage between a Chinese upstart firm and a Swedish iconic brand is an absolutely perfect match. At a time when China emerged as the world's biggest market for cars in 2009, surpassing US, Zhejiang-based Chinese automaker Geely made an ambitious bid to take over a premium western car marque. In what is seen as the biggest overseas acquisition to date by Chinese automakers, Geely Holding Co. agreed to buy Volvo Cars from Ford Motor Co. for $1.8 bn. According to the deal, $1.6 bn will be paid in cash and the remaining $200 mn will be note payable.

With the success of Geely's bid, its founder Li Shufu, touted as the Henry Ford of China, has been thrust into the spotlight. The signed deal could help Geely become a big international carmaker, thus realizing the dream of Li. Pending regulatory approval, Ford and Geely said they would close the deal in the third quarter of this year. Geely's Li has plans to nearly double the sales of loss-making Volvo to 600,000 by 2015, in part by building its presence in China. Though questions surface as to whether and how the 24-year-old Geely would turn around the 84-year-old giant Volvo, the buyout seems to offer a bright future to both the buyer and seller.

The Analyst Magazine, Ford Devolves Volvo, Chinese Automakers, Chinese Automobile Industry, Chinese Enterprises, International Car Market, Global Credit Crisis, Multinational Companies, Production Platforms, Risk Assessments, Global Markets, Engineering Resources.