CHINA's Geely Automobile and Volvo are in talks about combining their businesses to create a stronger global car maker with listings in Hong Kong and possibly Stockholm.

Zhejiang Geely Holding Group, Geely Automobile's parent group, bought Sweden's Volvo from Ford in 2010.

Geely's sales started to surge from 2015 as its products drew strength from Volvo technology.

"We look forward to working with Hakan Samuelsson, president and chief executive of Volvo, to further investigate this opportunity with the goal to strengthen the synergies within the group while maintaining the competitive advantage and the integrity of each individual brand," said Li Shufu, chairman of Geely.

Car makers are pursuing alliances and mergers as they respond to the cost of switching to electric cars, and tougher rules on emissions.

"Strategically, 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," analysts at Bernstein said in a note.

It remains unclear how much valuation would be added to the $16bn (£12.4bn) Hong Kong-listed company by injecting Volvo assets. Volvo and its parent group had been discussing a flotation before they dropped the listing plan in 2018, sources said.

Reuters

(c) 2020 City A.M., source Newspaper