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Seven years ago, Geely Holdings acquired Volvo for $1.8 billion. Seven years later, Geely Holding, with its Geely Automobile and Volvo, set up two joint ventures for different purposes on August 4th.
One is a leading manufacturer of luxury car brands, one is a technology cooperation company, and the company name is tentatively set as “Ningbo Space Time Equation Co., Ltd.â€. At this point, Li Shufu finally completed the integration of Volvo's technical resources.
Not long ago, in the Fortune magazine's 2017 World Top 500, Zhejiang Geely Holding Group was also listed.
Geely's scenery today is obvious to all, but the hardships behind the acquisition of Volvo in the past, few people really understand. In order to cross the road, Li Shufu actually gambled on his life and succumbed to his life.
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On August 2, 2010, Geely successfully delivered 100% equity of Volvo Car and related assets (including intellectual property rights), becoming the first automobile multinational company in China.
Author | Wang Qianma Liang Dongmei
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Source | Zhenghe Island (ID: zhenghedao)
I'm afraid no one can think that Li Shufu's interest in Volvo began in 2002, when the young Geely just got a car production license.
At the mid-level cadre meeting held in Linhai, Zhejiang Province that year, Li Shufu suddenly put forward a stone-thinking idea: "We are going to buy Volvo, we should be ready now!" The people present at the time were all over.
To know, the Swedish car company, founded in 1927, is the most proud of the Swedes' automotive company and the world's leading manufacturer of trucks, buses, construction equipment, ships and industrial engines. In history, Volvo has competed with ABB Audi, BMW and Mercedes in the market.
Why did Li Shufu look at Volvo?
There is only one reason: Volvo is the best choice for “overseas mature technology, mature parts, and mature car companiesâ€. Its original ability is very strong, the safety gene is unparalleled in the world, and the air quality technology control and environmental protection technology in the car is leading the world.
Thus, in May 2007, Li Shufu issued the "Ningbo Declaration" as a symbol, and Geely Holding Group (hereinafter referred to as Geely) began to implement strategic transformation. In the words of Li Shufu, the transformation is "prepared for the acquisition of Volvo."
That year, Ford suffered the biggest loss in a hundred years of history, when Alan Mulally was the CEO of Ford Motor Co., he proposed a "One Ford" strategy, drastically cutting non-core brands. This allowed Li Shufu to see the opportunity. He is more convinced of his judgment on the global automotive industry trend - the global auto industry will face a new restructuring pattern. According to his research, Ford will sell Volvo sooner or later.
Li Shufu quickly acted.
"I just want to buy Volvo"
"Sorry, Volvo does not sell"
One day in mid-2007, Li Shufu went to Hong Kong to find Zhang Wei, a core member of Geely's acquisition of Manganese Bronze, and had a deep talk about the acquisition of Volvo.
This is Li Shufu’s first mention of Volvo with Zhang Wei. In Zhang Jian’s view, in order to acquire Volvo in the domestic and international environment at the time, “just think about itâ€.
This is indeed the case. In the half year after the establishment of the “V projectâ€, the Volvo project team (Chen Yin and Geely CFO Yin Daqing became the earliest member of the project team), the project did not progress.
In September 2007, Li Shufu asked Zhang Wei to write an English letter expressing Geely’s interest in acquiring Volvo. Li Shufu was named and sent to Dearborn, the Ford Motor Company headquarters in the United States. He soon received an official reply from Ford: Sorry, Volvo does not sell.
At the time, Ford was controversial about whether to sell Volvo. The fourth generation of the Ford family, Bill Ford, is one of the opposition. The core concept of Volvo's safety and environmental protection is in line with the appetite of Bill Ford, who loves environmental protection. Volvo is the favorite of Bill Ford.
Even considering the sale of Aston Martin and Jaguar, Land Rover, Volvo's sale has not been put on the agenda.
However, Li Shufu was not discouraged and still insisted on contacting Ford in various ways. In January 2008, during the auto show in Detroit, through the matchmaking of the public relations company, Li Shufu saw Ford CFO Daun Leclerc. The other party gave Li Shufu 30 minutes. After listening to Li Shufu’s statement, Reccle repeated the previous reply: “Sorry, Volvo does not sell.â€
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Volvo's Swedish headquarters in Gothenburg
The situation gave Li Shufu an assist
In 2008, the financial crisis spread across the globe. In the first half of the year, sales in the US market fell by 17%. In contrast, the Chinese auto market is on the rise, with market sales rising by 10% during the same period.
In this context, the board of directors of the famous investment bank Rothschild Bank of France, after several debates and discussions, finally decided to accept the Geely "Volvo Project".
Rothschild Bank established the Volvo Project Quad Team, in which Hans Olof Olsen became a core member of the Volvo project team. Hans Olof Olsen has worked for Volvo for more than 40 years and was the CEO of Volvo Cars from 2000 to 2005. He is familiar with both Ford and Volvo. His introduction made a great contribution to Li Shufu's trust in all parties.
At the same time, the “V Project†team has also matured, divided into domestic and foreign parts: the domestic part is responsible for domestic fundraising and approval, CFO Yin Daqing is responsible for financing from banks and financial institutions, Wang Zhaoxing is responsible for negotiating with local governments. Project, Tong Zhiyuan is responsible for the government approval of the Volvo project;
The foreign countries responsible for negotiating mergers and acquisitions were mainly Zhang Wei and Yuan Xiaolin. Zhao Fuquan, then vice president of Geely's R&D, was in charge of technical negotiations. Later, he joined the negotiations with former Fiat China CEO Shen Hui and others.
Subsequently, the Volvo project intermediary team was basically determined. Fuld is responsible for all legal matters related to the acquisition of the project; Deloitte is responsible for acquisition projects, financial consulting, including cost savings planning and separation of operational analysis, information technology, pensions, fund management and auto finance due diligence; Roche Bank is responsible The overall coordination of the project with the seller and a valuation analysis of Volvo assets.
In October 2008, Ford Motor CFO Daun Reclear retired, and Lewis Booth, who is responsible for Ford Europe and Volvo Car Chairman, took over as CFO.
On December 1 of that year, Ford Motor made it clear that "seriously consider selling Volvo."
In January 2009, accompanied by Hans Olof Olsen and others, Li Shufu met Bill Ford and Alan Mulally at the Ford headquarters.
Li Shufu tells the story of his dealings with Boeing and Ford when he first made a car. He talked about his pursuit of Volvo for many years. His long-term plan for Volvo was recognized by Bill Ford and Alan Mulally.
This trip to the United States allowed Li Shufu to take a reassurance.
Princess Sissi
State-owned enterprises do not go? Geely got the "Road"
The other party is willing to sell only on the one hand, Li Shufu also has to solve the problem of "can buy".
In the first level, Li Shufu will get a pass from the government to go abroad to make a purchase.
According to Chinese law, Chinese companies must go through at least three departments for approval of foreign investment – ​​the National Development and Reform Commission, the Ministry of Commerce, and the State Administration of Foreign Exchange. If it is a state-owned enterprise, it still needs to be approved by the SASAC. The examination and approval of foreign investment projects is divided into the preliminary approval of the project and the approval of the project. The pre-approval of the project is an application submitted before the acquisition of the project, or an “information reportâ€, commonly known as “roads†in the industry.
In China, the external environment faced by private enterprises in their external acquisitions is particularly complicated and difficult, and they are often questioned by insufficient funds and operations.
Prior to the acquisition of the British company Rover, Li Shufu was once loved by state-owned enterprises. This time, Li Shufu learned the lessons from the previous report. In the report to the National Development and Reform Commission, Li Shufu focused on the industrial significance of the acquisition of the Chinese auto industry and the subsequent confidence of Volvo to achieve profitability.
The automotive industry environment once again helped Li Shufu.
In 2008, affected by the global financial crisis, the global automobile market was in a tough situation. Many overseas auto companies acquired by state-owned enterprises were not peaceful. Among them, SAIC Group 600104, the Korean Ssangyong Motor acquired by the stock market was affected by many factors, and production stopped. Trade unions went on strike. And trigger bloodshed conflicts. This has made China's major state-owned enterprises, including SAIC, cautious about overseas mergers and acquisitions. The Changan Group, which has a joint venture with Ford Volvo, also gave up further intervention after a brief contact. Therefore, after successively inquiring about several state-owned enterprises and getting negative answers, the National Development and Reform Commission gave Geely a “road stripâ€.
In March 2009, Geely submitted the first round of tenders to Ford. In April of the same year, the National Development and Reform Commission confirmed the information. Geely after getting the "Road" quickly entered the next stage of the acquisition of Volvo.
Hard negotiation
From April 1, 2009, the Volvo M&A project team began a four-month due diligence. After the due diligence, Geely submitted a second round of tenders to Ford. Negotiations around mergers and acquisitions officially began.
During the negotiation, the project team members and Li Shufu directly connected the phone. "There is no time difference, no time concept, call when you have something, or text message." Yuan Xiaolin said. When the busiest time, Yuan Xiaolin did not get through the bed for several days. Zhao Fuquan remembers that when the negotiations were deadlocked, he flew from the country to London, England. When he got off the plane, he got the news: If you don’t use it, you can’t talk anymore. Because it was late, Zhao Fuquan went straight to sleep, and got up at about 5 am the next day. He was running on the road near the stock market 000402. Running and running, he saw a man in front of him who was not tall and dressed in a suit. When he arrived, he found Li Shufu, who had been walking there for a long time.
On September 30, 2009, Li Shufu ushered in a key node for Geely's acquisition of Volvo: Ford Motor Company publicly announced that Geely became Volvo's preferred bidder.
But for the M&A team, the task is far from complete. Waiting for them is a more intense and intense negotiation around core intellectual property. Intellectual property is generally classified into three categories:
The first category is a wide-ranging mandate, that is, the intellectual property owned by Ford, which is open to both Volvo and Geely, and this part is very limited;
The second category is limited authorization. This part of intellectual property is owned by Ford. Volvo needs to be able to, but it must not be disclosed to Geely;
The third category is exclusionary intellectual property, that is, Ford's intellectual property, Volvo is involved in development or understanding, but Volvo can't use it. The second type of intellectual property is Geely's most concerned and the most laborious negotiation.
One of the most impressive negotiations for Zhao Fuquan was about a hypothesis that he suddenly remembered: In the unlikely event that Geely could not support Volvo for various reasons, would Ford agree to pack it for sale? How long is the deadline? When Zhao Fuquan raised this question, the Ford people took the table: "You haven't bought it yet, why do you want to sell it? Don't talk about it." Zhao Fuquan said: "When Ford bought Volvo 10 years ago, I didn’t expect to sell it today. In the United States, the two decided to get married to do pre-marital property notarization. Although they love to die, they have to prepare for the divorce."
In the end, the results of the negotiations could not be sold from Volvo within 10 years, and could not be sold within 4 years, and could be sold unconditionally after 4 years.
On December 23, 2009, the day before Christmas, Geely and Ford also announced that the two parties reached an agreement on the acquisition of Volvo's main commercial terms.
The offer is reduced by $1.7 billion? can
Ford's initial offer to Volvo was $6 billion, which was $450 million less than when Volvo was acquired 10 years ago. After the due diligence, Rothschild gave Li Shufu a proposed purchase price of $3.5 billion. Based on this, Li Shufu submitted a new round of tenders.
At the end of September 2009, members of the Geely Volvo team went to Gothenburg, and Li Shufu and others first saw the executives of Volvo Cars. After Li Shufu saw Volvo CEO Stephen Odell, CFO Yin Daqing and Volvo CFO had a separate meeting. This meeting directly reduced Geely's offer by $1.7 billion.
Yin Daqing found that Ford Motor has a forecast for Volvo Cars for the next three years. The predicted result is that Volvo basically achieved breakeven in 2010 and started to make profits in 2011. However, R&D expenditures based on this result have not increased correspondingly. Yin Daqing, Volvo's investment in research and development expenses and fixed assets in the next three years has decreased by $1.7 billion. After receiving support from the Rothschild team, Geely proposed that the offer be changed to $1.8 billion.
Negotiations on the acquisition of Volvo were interrupted for one month due to the huge changes involved in the transaction amount. During the period, Crown suddenly joined the bidding and proposed a practical financing plan. Since the middle of 2009, the global market has shown signs of recovery. The situation seems to be very unfavorable to Li Shufu. Li Shufu has no bottom in his heart, will Ford give up selling Volvo.
Waiting for a month in pain, Li Shufu finally got the good news: Ford's board of directors passed Geely's new offer.
Everything seems to be clear. Li Shufu began to show the international image of his “V Project†team. On January 17, 2010, Zhang Wei, Shen Hui and Tong Zhiyuan and others publicly faced the media and were interviewed. The social response was very good.
Next, waiting for Li Shufu, is applause and cheers? Do not! It is the most difficult issue in overseas acquisitions - the union.
Three English words, unloading the union's heart defense
One day in August 2009, Jiang Wenliang, director of the Ministry of Economic Affairs of the Workers Daily, received a call from a colleague: Volvo came to the National Federation of Trade Unions to complain. The Volvo Union hopes that the Chinese trade unions will come forward to stop Geely's acquisition of Volvo Cars.
After receiving the news from the Volvo Union to the National Federation of Trade Unions, Li Shufu invited Jiang Wenliang to meet in Hangzhou that afternoon.
Jiang Wenliang gave Li Shufu three suggestions: first, directly visit the Volvo union and express sincerity in person; second, directly respond to the other party's concerns, that is, commit to the union, such as whether the factory is relocated or not, whether it is layoffs Third, ask them to visit Geely to understand Geely’s ability.
In the second week, Li Shufu took the team to Sweden and Belgium, visited all the trade union leaders and related government departments, and went to Volvo's factory in Ghent, Belgium. During the dialogue with the union members, Li Shufu suddenly heard such a question: "Many people are interested in Volvo. Can you describe the advantages of Geely in three words?"
Although he has already played many drafts before, "Let's use three words to describe" Li Shufu is a little caught off guard.
In the face of dozens of eyes, Li Shufu took the opportunity to use the three English words he would say to say a word, and instantly captured the hearts of many union members: "I Love You." The chairman of the union of the Ghent factory immediately Take the Volvo factory logo and put it on Li Shufu.
The effect of this visit was very significant and it also made a good story.
About a month after returning from Hangzhou, Volvo’s 13 executives and union members came to Geely’s Ningbo production base. The visit was very smooth, and Volvo verified the ability of Geely and expressed satisfaction. At night in Shanghai, many people are rushing to take photos with Li Shufu. Their basic attitude towards the acquisition of Volvo by Geely is "no objection."
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Geely production workshop, welding robot is working
In the following months, Li Shufu went to Volvo, and the trade union delegation came to Geely and exchanged several times. On March 27, 2010, the Geely Volvo project team reached a final agreement with the union. A week later, Li Shufu waited for the result he had dreamed of: “engaged†with Volvo.
Looking back at the experience of dealing with the trade union, Li Shufu concluded: "I think it is a communication problem. The trade union is to fight for its interests, there is nothing else. And it is a rule, it is not a rip-off, it is according to the norm."
"I have gambled on my life."
On March 28th, 2010, Li Shufu in London, England, kept bowing his contract on the table. The half-meter-high document was signed and it took more than half an hour to finish signing. Li Shufu was motionless on the table, and Yin Daqing around him thought that maybe he was tired and needed a break.
When I was connected to the Geely Hangzhou headquarters, I could only hear the sound and could not see the image due to the signal transmission problem. Everyone reminded Li Shufu to connect with Hangzhou.
Li Shufu, who was squatting, looked up slowly, and the tears flowed like broken beads. At that moment, Li Shufu thought a lot. From June 2007, the project team was formally established. In January 2009, I saw Alan Mulally, and then in April 2009, I got the “Road†and then decided the financing structure three weeks ago, even a week ago. Before the union negotiations, the team members had a concern that the project team would be dissolved at any time.
Just one hour before the signing, Li Shufu’s relevant leaders who had been inviting to participate in the invitation could not participate in the signing ceremony. The temporary officials also refused Li Shufu’s invitation. Thinking of this, Li Shufu "what is the intersection of feelings."
Although the "Road" has been reached, the agreement has been signed, but! There is also a huge thorn across it - Li Shufu's "hiring" funds for Volvo are not fully in place.
This is another thrilling journey.
The financing structure has always been a concern for Geely to bid for Volvo. The financing problem has taken a lot of time for the Li Shufu team. At first, Li Shufu also thought of going to the bank loan, but only from the construction bank 601939, the stock branch Zhejiang Branch loaned Geely to 200 million US dollars.
Li Shufu tried many channels and even informed him of his financing plan in the small circle of friends in the Chinese corporate clubs. He had interested friends, but he did not talk about it.
Li Shufu also found a fund from Hong Kong Li Ka-shing, and the other party said that he was not interested in the car. Because of the financial crisis, overseas funds have almost no investment and sufficient funds.
After trying to explore all the way, Li Shufu can only put hope in cooperation with local governments. Just around 2008, local financing platforms have become a new financing channel. For enterprises, the benefits of cooperation with local governments are: first, they get preferential treatment from the local government in terms of land approval and taxation. Second, they can make full use of the local government financing platform to obtain the financial support needed for enterprise development.
After April 2009, Li Shufu found the Beijing Municipal Government. Negotiations with Beijing began smoothly. The Beijing Municipal Government set aside the corresponding land for Volvo in Yizhuang and provided 3 billion yuan as a fund to support the acquisition of Volvo.
Li Shufu is very satisfied with this program. Geely quickly rented a 18-square-meter house in Room 6034, No. 10, Hongda North Road, Yizhuang Economic and Technological Development Zone, Beijing, as the new company registration.
On September 29, 2009, Beijing Geely Kaisheng International Investment Co., Ltd. with a registered capital of 500 million yuan was formally incorporated, and Zhejiang Geely Company held 100% of the shares.
"The intention contract and the framework were signed. When it was really going to pay, suddenly, within a few hours, the whole situation changed." The project could not proceed as expected, which made Li Shufu unprepared.
You know, the negotiations between Geely and Ford entered a new stage. Geely needs to clarify the financing structure before signing the contract. The expected signing time is February 8, 2010.
Time is too tight, Li Shufu needs faster decision-making and support.
It coincided with the independent innovation report group sponsored by the Ministry of Science and Technology to Chengdu, Sichuan Province, and invited Li Shufu to make a report in Chengdu. Chengdu officials are very active in contacting Li Shufu to see if the project can be placed in Chengdu.
When Li Shufu met with Chengdu officials, he did not talk about the Volvo project. But the next day, Ford announced that Geely was the preferred bidder for Volvo Cars.
When the situation is forced, Li Shufu said: "Well, let's put it in Chengdu. You take 30 billion yuan. We don't have enough money."
Soon, the Chengdu Municipal Standing Committee meeting was suspended, and the Volvo project was immediately studied. The meeting was immediately decided: Yes.
Geely successfully raised 3 billion yuan from Chengdu. The specific method is that Geely borrowed from several state-owned institutions in the form of one-year loans, and the Chengdu government guaranteeed that Li Shufu himself had a lifelong counter-guarantee and the problem was solved.
On December 12, 2009, Beijing Geely Wanyuan International Investment Co., Ltd. was formally incorporated with an initial registered capital of 20 million. The sole shareholder is Beijing Geely Kaisheng International Investment Co., Ltd., which was newly established three months ago.
At this time, Wang Zhaoxing is still rushing between various local governments and actively approaching. The Daqing City State-owned Platform provided 3 billion yuan of funds in the form of shareholding.
On December 22, the registered capital of Geely Wanyuan was changed from the original 20 million yuan to 7.1 billion yuan. Geely's acquisition of Volvo's first round of capital injection was completed. The next day, Geely and Ford Motor Company agreed to acquire all the important commercial terms of the Volvo Car Company.
Negotiations continue, Li Shufu is still looking for funds, a total of about 8.1 billion yuan of funds, and a funding gap of 1 billion yuan.
With the verbal support of Shanghai government officials, Shanghai Jiaerwo Investment Co., Ltd. was established on February 3, 2010 with a registered capital of 1 billion yuan (the paid-in capital has not arrived). However, the two sides had differences on the project landing. The Jiading District Government of Shanghai supports Volvo to establish a research and development headquarters in Shanghai, but does not support the landing of complete vehicles and parts. Geely hopes to put the whole vehicle in Shanghai and realize its strategic layout in East China.
Geely accepted the conditions for negotiations by the Shanghai Municipal Government and the two parties signed the contract quickly. On March 2, 2010, Shanghai Geely Zhaoyuan International Investment Co., Ltd. was formally established with a registered capital of 8.1 billion yuan, Beijing Geely Wanyuan invested 7.1 billion yuan, and Shanghai Jiaerwo Investment Co., Ltd. invested 1 billion yuan. Until June 13, Shanghai Jiaerwo Investment Co., Ltd. paid 1 billion yuan to pay in place, Li Shufu and Wang Zhaoxing were relieved. At this time, the delivery date is less than two months.
Considering that he left a road to Geely Automobile, Li Shufu did not accept the financing conditions for the equity of the listed company. Finally, the local government, Shanghai and Daqing City entered and exited through the shareholding platform of the state-owned platform; Chengdu and Zhangjiakou did not have equity rights, and Li Shufu personally re-guaranteeed the life through the government's guarantee of the loan.
"I have gambled on my life," Li Shufu said.
"We have come out of the first step"
August 2, 2010, London, UK. The Volvo delivery ceremony is scheduled to take place at 10 am local time. Li Shufu lived in the hotel where the delivery ceremony was held. He got up at 7:00 and started a day of preparation. At around 9:30, Shen Hui went to the bank and pressed an "OK" button. The money was transferred to Ford.
Before the delivery ceremony, Li Shufu and Zhao Fuquan, Ning Shuyong and others took photos before the signed documents.
Around 10 am, Li Shufu and Ford Motor CFO Lewis Booth signed the two, then the two handshaked and the delivery ceremony was completed.
For Li Shufu, this signature is a symbol and a new beginning. He expressed his feelings when he was interviewed by Reuters in the same day: "
We have realized the dream of acquiring Volvo, but this is not our final plan, it is just a new starting point. He went on to say: "We have reached the foot of a mountain... I hope and believe that Volvo Cars can climb the peak. â€
From June 2007, the “V Project†team was established, and the delivery was officially completed in August 2010, becoming the new boss of Volvo. Li Shufu spent three years. For him, it is not unusual for the people to say that the “final completion†acquisition of the entire shareholding of Ford’s Volvo Car Company is not unusual.
Li Shufu’s future is also delighted, as the acquisition of a 100% stake in Volvo Cars means that Geely owns the Volvo Car trademark ownership and use rights, 10,963 patents and special intellectual property rights, and 10 series of sustainable products and product platforms. , about 560,000 production capacity and good facilities of two automakers, one engine company and three parts companies, independent database for vehicle and key parts development and 3,800 high-quality scientific research personnel R&D systems and capabilities And sales service networks of 2,325 outlets in more than 100 countries and regions.
The event that Geely, which he led, acquired Volvo Car Corporation is also the largest overseas acquisition of Chinese auto companies.
After the press conference, Li Shufu sat in the hotel room and was silent for a long time. Joining Geely as an assistant to Li Shufu for half a year, Ning Shuyong was overwhelmed and said to Li Shufu: "Congratulations, the chairman, the Long March has finally come down."
Li Shufu was very quiet, did not cheer, and did not like to be happy. He only said: "We have come out of the first step. How to develop Volvo now is a heavier and longer-term task." Li Shufu knows that in the automotive industry overseas In mergers and acquisitions, the acquisition is only the first step, and the operational management challenges facing the future are even greater.
After the acquisition of Volvo, Li Shufu made two important events. From the results, he is obviously prepared. How does he manage Volvo? We will tell you in the next article.
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