Geely and Volvo Planning to Merge and List as One

On Monday while giving a joint press statement, Geely Automobile Holdings (OTCMKTS: GELYF) announced a proposal to merge with Sweden based Volvo Holdings AB and list as one, a move which will bring Volvo back to the markets and make Geely the first Chinese global automaker.

This announcement comes almost 2 years after Volvo unsuccessfully attempted to go public independently.

Geely acquired Volvo in 2010 making Chinese billionaire Li Shifu chairman of both automakers. Shifu has been spending his fortune consolidating brands outside China to complement Geely, some of the brands he has invested in include; Britain based LEVC, Malaysian based Proton he recently cancelled talks with sports luxury automaker Aston Martin.

The merged company will be listed in Hong Kong and could possibly seek a secondary listing in Stockholm, additionally the merger will help with curbing costs involved in switching to electric vehicles since the two automakers jointly own Polestar.

Volvo said any deal between would accelerate financial and technological synergies between the two automakers further adding, any deal would keep the distinct identity of Volvo, Geely and Polestar.

Robin Zhu, a Hong Kong based analyst believes such a move will place Geely among global automakers and it could double and triple its operating profits and revenues respectively.

“The deal feels like after years of deal making a first move by Chairman Li Shufu to consolidate his sprawling automotive empire, and to pay off some of the debt that had built up. Uniting Geely, Volvo, and Lynk under the same listed entity would mark the emergence of China’s first, and possibly only, global carmaker,” said Zhu.