M&A between GEELY HOLDINGS AND VOLVO CARS

2605 WordsOct 27, 201411 Pages
STUDY OF MERGERS AND ACQUISITIONS BY ANALYSING THE DEAL BETWEEN GEELY HOLDINGS AND VOLVO CARS 11/23/2013 Group: 06 TABLE OF CONTENTS TOC \o "1-4" \h \z \u 1.EXECUTIVE SUMMARY PAGEREF _Toc350291717 \h 22.INTRODUCTION PAGEREF _Toc350291718 \h 23.DESCRIPTION OF GEELY AND VOLVO AS INDIVIDUAL COMPANIES PAGEREF _Toc350291719 \h 33.1 Geely Holdings PAGEREF _Toc350291720 \h 33.2 Volvo Car Corporation PAGEREF _Toc350291721 \h 34.MOTIVATION FOR THE DEAL PAGEREF _Toc350291722 \h 35. ESSENTIAL TESTS PAGEREF _Toc350291723 \h 45.1 The attractiveness test PAGEREF _Toc350291724 \h 45.2 The Cost of Entry Test PAGEREF _Toc350291725 \h 55.3 The Better-Off Test PAGEREF _Toc350291726 \h 56. SYNERGY ANALYSIS PAGEREF _Toc350291727 \h 56.1 Management…show more content…
And lastly, the management should consider the option of having an ally with Volvo in the first place before going for the whole 100% equity stake in the company. DESCRIPTION OF GEELY AND VOLVO AS INDIVIDUAL COMPANIES3.1 Geely HoldingsGeely is a Chinese automotive manufacturing company with the head-quarter situated in in Hangzhou, china and is listed in Hong Kong stock exchange (code: HKG: 0175). Geely automobile holdings is owned and controlled by the parent company named Geely Holding group whose business is in the automobile sector. Market: In 1998, Geely sold about 200 cars but its annual sales volume shot up to 326710 in 2009 (about 96% rise). In terms of the market share, Geely was about 4.3% of the domestic Chinese automobile market in 2009. The sales in domestic segment of Geely was about 95% in 2009 with the management ambitious goal of growth in market share of both overseas and domestic. Financial Situation: The financial report card of Geely registered consistent progress in terms of turn-over as well as profits. In 2009, Geely registered a net profit of 1.3 billion RMB ($188 million). Brand and Technology: As far as brand is concerned, Geely is regarded as a low-cost brand with mediocre quality and was competing in the low end segment of the automobile market. Geely has a corporate culture of entrepreneurship with little
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