| Geely capital raising move may fund Volvo buyout bid |
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| Thursday,September 17,2009 Posted: 18:09 BJT(09 GMT) |
| From:China Daily Article type:Reproduced |
Geely Automotive, the Chinese carmaker whose parent is eyeing Ford's Volvo unit, is set to raise capital through a bond issue in a move that may provide funding for a Volvo bid.
Analysts, however, said the bonds could also be used for Geely to expand its car making capacity rather than to launch an immediate bid for Ford's $2 billion plus Swedish car unit.
Geely said last week its parent was considering a bid for Volvo with a local government-backed investment firm.
A successful deal would boost the profile of Geely, a small, homegrown carmaker and give it access to Volvo technology it needs to upgrade its cars.
Yet, some analysts have raised concerns about whether the Chinese carmaker will be able to make the acquisition work.
"The move is a bit of a surprise to the market," said Vivien Chan, analyst at Sinopac Securities Corp. "We had a meeting with the company before and they did not mention any funding needs."
In March, Geely bought Australian automatic transmission supplier Drivetrain System International for $40 million, but a company executive said that deal was paid for from proceeds of a share placement in May.
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