China’s Geely Automobile Holdings Ltd (吉利汽車) and its Swedish affiliate Volvo Cars are putting off earlier plans to merge, wagering that they would be more agile as standalone entities.
The manufacturers would preserve their separate corporate structures, while cooperating more closely on electrification, autonomous-driving technology and software, a joint statement said.
While they would no longer pursue a combination as announced last year, new listings could be on the table.
“This is about maintaining top-line momentum,” Volvo chief executive officer Hakan Samuelsson said in an interview. “A merger isn’t always positive. You risk losing momentum because there’s too much internal focus.”
Geely and Volvo would also move their powertrain development activities into a separate company, which would enhance focus on development of electric vehicles, Samuelsson said.
Daimler AG joining the business would be positive, he said.
The German automaker counts Geely founder Li Shufu (李書福) as its biggest shareholder and in November last year announced plans to jointly develop a gasoline engine that could be electrified later.
The moves are the latest examples of vehicle companies rapidly transforming their businesses as they eschew the internal combustion engine in favor of batteries.
Daimler this month said that it would spin off its trucks unit after more than a century of keeping it under the same roof as its vehicle operations, while Volkswagen AG is mulling a possible listing of Porsche AG.
Volvo might seek a listing of its own after deciding against a merger with Geely. It tabled plans for an initial public offering (IPO) in 2018 after early feedback from investors indicated that they would have assigned the company a lower-than-expected valuation.
“It’s important to have the possibility to reach out to equity markets as a standalone company,” Samuelsson said.
No decision has been made on a renewed IPO push.
Geely’s parent company, Zhejiang Geely Holding Group Co (浙江吉利控股), acquired Volvo from Ford Motor Co for US$1.8 billion in 2010, when the US automaker was recovering from the global financial crisis.
Bloomberg Intelligence analysts in December last year estimated that Volvo could be valued in the range of US$8.1 billion to US$11.6 billion.
Li has been forging ties with a vast array of companies to stay abreast of the two great shifts hitting the industry: electrification and automation.
In less than a month earlier this year, Geely agreed to pacts with Baidu Inc (百度), Hon Hai Precision Industry Co (鴻海精密) and Tencent Holdings Ltd (騰訊).
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