Since the completion of the acquisition of volvo cars in 2010, Geely has received mixed public feedback.
Those who praised Geely believe that for Volvo, which Ford spent more than $6 billion to win, Geely only spent $1.8 billion, and the timing of the sale was too successful. But people who questioned the acquisition said that although the "Nordic luxury car" Volvo was acquired on the surface, the technology of others, especially the engine technology of the most short-board domestic cars, Geely could not touch it, and this money was not wasted?
So, Geely paid $1.8 billion, did it buy Volvo's core technology? It all started with the "acquisition war" 12 years ago.
I. Li Shufu's Volvo "Acquisition Dream"
Li Shufu's obsession with Volvo dates back to 2002.
At that time, Geely had just changed tracks, from a motorcycle with 2 wheels to a car with 4 wheels. At that time, even compared with domestic car companies, Geely was a rookie-level player, and if you look at the world, Geely is even more like dust. But Li Shufu, who is bold in the art of the art, is the mind that dares to move the snake and swallow the elephant.
"We're going to buy a Volvo, we have to prepare now!" At a meeting of middle-level cadres in 2002, Li Shufu first mentioned the acquisition of Volvo, but no one present took it seriously. It doesn't matter if it's not true, Li Shufu led the newly transformed Geely to move forward with difficulties, and on the other hand planned for the acquisition of Volvo.
In 2007, Geely issued the Ningbo Declaration, which shocked its domestic counterparts, which pointed out that Geely should carry out strategic transformation.
Why is Geely transforming again? According to Li Shufu, this Geely transformation is still in order to acquire Volvo, but in fact, it is to help Geely transform from a price war to a technology war and a brand war.
In September 2007, Li Shufu sent a signed letter to Volvo's major shareholder, Ford, expressing for the first time the idea of buying Volvo, and Ford's response was also very direct: not to sell.
In January 2008, under the matchmaking of goldman sachs and Rothschild, the investment banks of the two sides, Li Shufu was given the opportunity to communicate face-to-face with Ford executives. At the time, Ford's CFO, Raclair, was condescending and only gave Mr. Lee 30 minutes to talk about his reasons for buying Volvo. It's as if the interviewer is asking the candidate, "What's the matter with our company?" In the face of Raclair's arrogance, Li Shufu still talked for half a day, and as a result, Raclair still disdainfully said: "I'm sorry, or not for sale." ”
So, li Shufu's volvo acquisition dream, has it been shattered?
Second, Volvo's high-level anti-water Ford
Fast forward to the end of 2008, Li Shufu's acquisition team joined a blockbuster, the former CEO of Volvo Cars, Hans Orof. Impressed by Li Shufu's volvo vision, Hans began to advise Geely's "takeover war".
In September 2009, at the recommendation of Hans, Li Shufu met with Volvo's CEO at the time, Stephen Odell. Not surprisingly, Stephen also agreed with Shufu Lee's willingness to buy. With the support of Volvo's top brass, Geely's acquisition is only a barrier to Ford.
At this time, Ford, which was deeply lost due to the financial turmoil, had to lower its body and agreed to sell Volvo, but the negotiation process was not smooth. At first, Ford offered as much as $6 billion, while Li Shufu gave a price of only $2 billion. The huge price gap once annoyed Ford and wanted to end the negotiations.
At the critical moment, Volvo's Hans and Stephen struck again, not only contributing to the completion of the acquisition, but also helping Geely cut another knife, killing the price from $2 billion to 1.8 billion. So far, the buying resistance from Ford has basically flattened, selling the Volvo sedan it bought for $6 billion that year. It is said that the contract that the two sides needed to sign at that time was half a meter high, and it took Li Shufu half an hour to sign it. When Li Shufu finally collapsed and leaned back in his chair, people could no longer distinguish the sweat and tears on Li Shufu's face at this time.
In August 2010, Geely completed the delivery of 100% of the shares of Volvo Cars, and the Business of Volvo Cars and related brand values were officially owned by Geely. It is worth noting that Volvo's related assets, including intellectual property rights, are actually among the deliveries. Not as rumored, Geely did not acquire core technologies such as Volvo engines.
So why has Geely not been in a hurry to apply Volvo technology for so many years?
Third, acquisition is not to ask for technology, but to win people's hearts
Figuratively, the acquisition behavior between enterprises is like "big fish eating small fish", ideally the more you eat, the stronger you grow. The reality is often that whether you can eat it is one thing, whether you can digest and absorb it is another thing.
For enterprises, the difficulty of acquisition is not only reflected in the negotiation, bidding, and fund raising at the procedural level, but also in the issue of cultural integration between enterprises. Because where there are people, there are rivers and lakes. The two rivers and lakes are put together and take a certain amount of time to "polish".
In overseas mergers and acquisitions, Chinese companies have many cases of failed polishing. For example, in 2004, SAIC motor acquired South Korea's SsangYong Automobile.
At that time, not long after the completion of the acquisition, SAIC began to directly interfere in the internal management affairs of SsangYong, and also started the idea of merging the SsangYong platform. As a result, SsangYong Motors unanimously resisted from the management level to the grassroots employees. After 4 years of sleeping in the same bed and dreaming, the contradiction between SAIC and SsangYong has risen to the level of open mutual tearing.
Since 2008, SsangYong employees have launched a strike to stop production, and SAIC has been overwhelmed. A year after bumping and bumping, SsangYong Automobile, which was originally acquired by SAIC for 4 billion yuan, entered bankruptcy liquidation procedures.
It turns out that going through the acquisition process is only the first step to completing the acquisition. How to win the hearts and minds of the acquired enterprises and make the other party believe that they can live better after changing the court is the key to the success of the acquisition. From this perspective, Geely's approach is exemplary.
Looking back at Geely's entire acquisition process, why are volvo's former presidents and current presidents willing to facilitate transactions for Li Shufu? Why do they, as the acquired party, prefer to collect less money and help Geely against the old owner Ford?
Although Volvo was "married" by Ford with the title of "Nordic luxury car", At that time, Ford prevailed in the "one Ford" policy, focusing on the blood supply for the Ford brand, so that Volvo lost the initiative to develop the brand. Volvo's long-term interests have been seriously damaged. It was Ford who lost the volvo people's hearts first, and then Li Shufu had the possibility of convincing Volvo's top brass to rebel against the water.
IV. Conclusion
Geely, which completed the acquisition, gave Volvo enough autonomy and, in the end, got the technology it wanted. In 2012, just two years after the acquisition was completed, Geely and Volvo reached a technical partnership. Volvo offers Drive E series engine technology that is widely used in the Geely Binyue, Bo Rui and plug-in hybrid models of the Lynk & Co series.
More importantly, in the long-term cooperative research and development, Geely's own technical research team has also received rare exercises. In February 2021, Geely and Volvo Cars reached a new agreement on the merger of powertrain business, and the two sides will establish a joint venture, and two technical backbones, Volvo and Geely, will jointly carry out research and development cooperation in the development of efficient internal combustion engines and dual-motor hybrid systems.
10 years of effort, 10 years of waiting, the engine technology that makes Geely dream, finally got it.