Geely’s Shanghai Share Sale Is Said to Hold Up Volvo Merger

Geely Automobile Holdings is delaying its planned merger with Sweden's Volvo Cars because of the Chinese automaker’s plans for a secondary listing in Shanghai, according to a media report.

The pair will resume merger talks this fall, The Paper reported today, without disclosing its sources. Geely and Volvo said in February that they were exploring a combination, with a view to issuing shares in Hong Kong and Stockholm.

Geely Automobile and Volvo are two independent units of Geely Holding Group which bought the underperforming Gothenburg-based automaker from Ford Motor in 2010.

Geely Automobile's board has approved a proposal to sell new shares on the Nasdaq-like Star Market, Shanghai's year-old science and technology board, making up 15 percent of the total outstanding, the Hong Kong-listed firm said on July 17.

In the first half of this year, Volvo lost SEK989 million (USD110 million) amid the Covid-19 pandemic after reporting net profit of SEK5.5 billion (USD620.3 million) a year ago, according to an earnings report released yesterday. Revenue fell 14 percent to SEK111.8 billion (USD12.6 billion) as the firm sold nearly 21 percent fewer vehicles at about 267,000 units.

But Volvo's sales in China fell just 3 percent in the first half after rebounding in the second quarter. The company expects to recover this half as the auto market is returning to normal.

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