China's Geely completes Volvo buy

China's Geely on Monday completed its purchase of Ford Motor Co's (F.N) Volvo unit, marking China's biggest acquisition of a foreign car maker and reflecting the nation's rapid rise in the auto world.

Zhejiang Geely, parent of Hong Kong-listed Geely Automobile Holdings Ltd (0175.HK), said on Monday it paid $1.3 billion in cash and issued a $200 million note to Ford. That represents $300 million less than the previously reported headline number of $1.8 billion, but Ford said it would get a further "true-up" payment later in the year.

With the deal now done, the real challenge for Geely will lie ahead, as it aims to restore Volvo to long-term profits. Volvo Cars posted revenue of $12.4 billion in 2009 by selling 334,000 cars, but it recorded a pretax loss of $653 million.

Geely's plan includes using the Swedish nameplate to produce luxury brands in China -- which passed the United States last year to become the world's biggest auto market -- while maintaining its operations in Europe to supply the international market.

The deal was finalized at a handover ceremony in London attended by Li Shufu, chairman and founder of privately held Zhejiang Geely and now also chairman of Volvo.

"We've fulfilled our dream of acquiring Volvo, but that's not the end of our plan; it's only the starting point," Li told Reuters in a London interview. "We've arrived at the foot of a big hill ... We hope and believe Volvo Cars will climb to the top of the mountain."

Li, who said he believes the $1.5 billion will be "very close to the final number" Ford receives, wants Volvo to compete with the costliest sedans of BMW and Mercedes.

Volvo's unions opposed the deal throughout much of the process over concerns that their jobs would be moved to China, but gradually were won over by Geely's promises to keep the brand separate and continue production in Europe.

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