Geely acquires Volvo's heart-breaking 800 days

During the Spring Festival 2010, Yu Liping, president of Los Angeles Greater China, did not rest well. In the morning, she was always disturbed by Geely's Chairman Li Shufu's phone call. Yu Liping clearly remembers that on February 13 (New Year's Eve), Li Shufu made a phone call at 18:30. It was a new year's dinner until 20:30. On February 14th, Li Shufu called again at 8 a.m. Telephone, "I think this person is not crazy. I have to worry about the work during the Chinese New Year."

Li Shufu said to Yu Liping at the time that he wanted to write a letter to Ford's CFO, Louis Booth, and that the difficulty in communicating the Volvo project was mainly due to financing issues.

From January 18, 2008, Li Shufu met with Booth for the first time at the Detroit Auto Show, expressing his formal intention to acquire Volvo. By signing the M&A agreement on March 28, 2010, the entire transaction lasted 800 days, similar to the above details. The small "interlude" was almost uninterrupted. As the "consultant" of this merger, Rothschild and Yu Liping, together with Li Shufu and Geely, experienced a thrilling 800 days.

From the beginning of 2008, Rothschild began to participate in Geely's acquisition of Volvo, and the risks in the transaction frequently occurred. The talent reserve was not enough, there were competitors constantly to “stagger”, financing was frequently troublesome, and intellectual property issues encountered obstacles. However, Li Shufu is always on the verge of turning ill and living. "It's like a yo-yo. Every time it has reached the bottom, it quickly hits the ground, but it's up again," Yu Liping told the China Business News.

On August 2, 2010, Li Shufu and his team held a delivery ceremony for the Volvo Car M&A project in London, and announced that this long-lasting acquisition has finally achieved a staged victory.

Rothschild’s contact with Li Shufu began in 2007. The Greater China team visited Li Shufu for the first time, recommending several interesting acquisition projects such as Volvo and Saab. The answer of Li Shufu was very impressive to Rothschild: "Volvo is the first choice. I have been paying attention to Volvo for a long time."

Li Shufu's idea of ​​the acquisition of Volvo for the first time was in 2002. He expressed this idea at an internal conference, but someone close to Li Shufu said that the chairman always had many ideas. At that time, Geely was still very young. Nobody had taken this. Fan Zhuang Zhuang language really. The financial crisis and the declining US auto industry gave Li Shufu an opportunity. In early 2007, Mulally came to Ford as CEO from Boeing and immediately put forward the strategy of “One Ford” and decided to sell several of its subsidiaries including Volvo. Brand.

Li Shufu who closely followed Volvo immediately shot up. In September 2007, Ford’s US headquarters received a registered letter. Li Shufu made the idea of ​​acquiring Volvo through Ford’s public relations company. Until this time, Roshill did not intervene, and Geely’s It is unknown that the acquisition intention has not caused Ford’s attention.

However, an encounter at the Detroit Auto Show in early 2008 made Li Shufu determined to hire a financial advisor. At that time, Li Shufu met for the first time with the help of the public relations company, Ford's chief financial officer, director of the office of the board of directors and purchasing director and others. The conversation was unsuccessful. Ford continued to emphasize "Volvo has $15 billion in annual sales". The implication is that Geely is too weak. Although Li Shufu said that he has the sincerity and ability to do so, but the other party just ritually called "return to study." At that time, Li Shufu's only side was Zhang Jian, who he had dug up from British Petroleum.

After returning home, Li Shufu was determined to formally invite Rothschild to participate in the acquisition of Volvo. He took the initiative to meet with Yu Liping. This time, Li Shufu left a deep impression on Yu Liping. She said: “I think Li Shufu’s child is persistent. And perseverance, to see him speak slowly and softly, but in fact it is an impatient personality."

In January 2008, this goal was locked in Volvo. But almost from the moment Yu Liping took over, difficulties have been accompanied. The first difficulty was to convince Rothschildi headquarters that Geely had the ability to acquire.

When Yu Liping and Li Shufu met for the first time, Geely Automobile had a share price of 8 cents and a market value of 1.08 billion US dollars. This dish is less than one-tenth of that of Volvo. With the advent of the financial crisis, Geely Automobile's stock price fell to 2 cents, and the plate shrank to 300 million U.S. dollars. For Yu Liping, recommending such a company to the headquarters is an adventure.

“How could a European company more than 200 years old, like us, put its goodwill on an unnamed Chinese private car company? In fact, the process we finally decided on is also very painful. We need to go through internal approval. The financial crisis at the time. It hasn't started yet. There are other auto companies in the west who want to buy Volvo.” Yu Liping said.

Rothschild is one of the most prestigious investment banks in the automotive industry. According to Thomson Reuters, in the 12 months prior to the acquisition of Volvo by Geely, the total value of car acquisitions provided by Rothschild was US$89.25 billion. .

After Geely applied for an acquisition, a European car company also explicitly invited Rothschild to help him bid for Volvo. According to Rothschild's regulations, only one company can participate in bidding. Yu Liping needs to convince her colleagues to abandon this European car company, and this company's sales is almost 10 times that of Geely.

At the global partner meeting of Rothschild in June 2008, Yu Liping stepped onto the podium. The theme of her speech was the importance of emerging markets including China to Rothschild, but she quickly “dated” it. .

“Please all people pay attention to the fact that China’s foreign exchange reserves have reached 2 trillion US dollars. What will it do to be used in the future? It will definitely be used to support overseas mergers and acquisitions in the future. It will also have technology in the industrial and manufacturing sectors. Brand companies will definitely go out in the future, and the direction of going out is to you Western developed countries. I have a project today..."

This is a radical speech, and Rothschild is known as a conservative in the industry. Under the rostrum, those gray-haired partners were infected by the high emotions from China. Eventually the board of directors decided to abandon the aforementioned European companies and choose Geely.

Afterwards, the acquisition team was established in accordance with the division of labor: Fuld's law firm was responsible for all the legal affairs of the acquisition project; Deloitte was responsible for the acquisition project, financial consulting, including cost-saving plan and separation operation analysis, information technology, pension, fund management And Car Financial Due Diligence; Rothschild Bank is responsible for the overall coordination of the project with the seller and conducts a valuation analysis of Volvo assets.

In January 2009, another year at the Detroit auto show, Li Shufu was prepared. Apart from Zhang Qian, there was also a woman - Yu Liping. Li Shufu said to Mulally, "I'm very prepared and the team of consultants are all pleased."

In the industry, a well-known investment bank has stepped in to prove that this matter is "serious." Li Shufu's visit in accordance with the rules of the game left a deep impression on the Ford executives. Mulally said that once Volvo is sold, it will notify Geely the first time. .

Almost at the same time that Geely and Ford have established good mutual trust, Geely has also communicated with the government of the project in China. In March 2009, Geely received a letter of support from the National Development and Reform Commission. At that time, many domestic companies had burst out of hope to acquire Volvo news, including Changan, Beijing Automotive, Chery, etc., but holding the National Development and Reform Commission's letter of support, Geely has virtually no domestic competitors.

"A lot of people complain that the Chinese government's approval is very tedious, but I don't think it's necessary to complain about how to implement this procedure as much as possible. You don't understand China's industrial policy, you don't understand the situation of the acquisition of competitors, and you wait until the program. Almost to go to the Development and Reform Commission, the National Development and Reform Commission to review the time is not." Yu Liping said.

The time was seamless. In April of that year, Ford first opened the database. The project team began to read 6473 documents. Through more than ten expert meetings, two on-site visits, and three management statements, the Geely acquisition team began to truly understand Volvo. In response to the 2,000-page contract that Ford drafted, 15,000 modifications have been made.

At the same time, Geely’s acquisition progress report was reported to the National Development and Reform Commission. Li Shufu was once worried that it would affect the evaluation of the acquisition because he did not understand Geely. Therefore, in the report, Li Shufu focused on the significance of the acquisition to the Chinese auto industry and follow-up earnings. The timely and effective communication with the relevant national departments headed by the National Development and Reform Commission not only laid a foundation for the successful approval of Geely, but also made preparations for seeking financing from state-owned banks.

In May 2009, there was a problem with Volvo. Some Swedish officials publicly wrote articles in the newspaper against Chinese companies acquiring Volvo, saying that due to the huge differences in culture and corporate management concepts, the Chinese are not the best choice.

In July, when two other bidders joined in the final bid, a U.S. company named Crown (CROWN) and a Swedish consortium burst out. The quotation once rose to 2.8 billion U.S. dollars. The organizers were senior executives at Ford and Volvo.

The sudden contenders made the Geely and Rothschild groups nervous. They realized that they were not Volvo's only choice. These two enemies must be taken seriously. Higher quotations and "owner" access are all attractive to Ford.

Geely's M&A team made a cool analysis and believed that the other party's offer was higher, but the hasty price did not match Ford's taste. As a globally-recognized M&A deal, Ford doesn't just want to sell a good price. It needs to be a "responsible" seller, and will not knock off the Volvo brand for this money.

In addition, the shadow of the financial crisis has not yet dispersed, it is easier to raise more than 2 billion US dollars? Even if the financial strength of the consortium is strong, Yu Liping analyzed: "If there is no support from the Chinese market, why should Volvo be back to life?"

Rothschild and Geely immediately petitioned Ford and demanded that Ford should not delay the deadline for submission of bids in order to suddenly appear two bidders, or they would withdraw from the bid. Sure enough, Ford had no delay. The two consortiums hurriedly withdrew from the bid because they failed to complete the financing on time.

In July 2009, Geely submitted a legally binding bid to Ford for approval. On this day, Li Shufu really took the step that drove the boat. At that time, at an internal meeting of Geely, Li Shufu said with emotion: "This time, I've put all my life on me!"

In fact, since 2007, Li Shufu has prepared for the acquisition of Volvo. First of all, he has gradually saved the profit that Geely Group has earned for many years, and has no longer used it for the rolling development of Geely, but Geely needs for development. The funds were also realized through the introduction of Goldman Sachs. In September 2009, Goldman Sachs injected US$250 million into Geely’s listed companies in Hong Kong. This money was used for the construction and expansion of multiple projects in Jinan, Chengdu and Hangzhou.

On September 29, 2009, Geely registered Beijing Geely Kaisheng International Investment Co., Ltd. in Beijing, which is a wholly-owned subsidiary of Geely. This is the first step for Geely to finance the Volvo project.

The registered capital of Geely Kaisheng is 4.1 billion yuan, which is fully funded by Geely. According to the idea at that time, Geely will also use government financing to resolve the other 4 billion yuan needed for mergers and acquisitions.

Rothschild designed a smart financing plan for Geely, taking care of Geely itself and allowing it to take a favorable position in the future equity structure; neither can we use the money of listed companies in Hong Kong (realizing Geely is Geely, Volvo is Volvo) while maintaining the appeal of this project.

To this end, Geely has two paths, one to take the government route and one to cooperate with the fund. So Rothschild’s M&A team is divided into two groups, one group to find the government to talk about, and one group to find the fund to talk about. Before the merger, Li Shufu contacted major funds including CITIC Capital, Dinghui, Legend Holdings, and government funds such as Bohai Fund.

Li Shufu persuaded domestic and foreign strategic investors to rely mainly on two concepts: one was made in China and the other was in the Chinese market. However, almost all of the fund's requirements for this project are two things: either put it into the list of listed companies in Hong Kong and immediately find an exit path; or, after the acquisition, separate the listing of the Volvo project as soon as possible to achieve exit.

At the end of December 2009, it was Geely's external declaration of a formal agreement with Ford. "We were looking for various funds, including rich individual investors. However, due to the different economic stances of the two sides, they did not commute together," Yu Liping said.

Geely's team responsible for government financing talked about more than a dozen cities across the country, including newspapers in Beijing, Tianjin, Zhuhai, Dongguan, Chengdu, Daqing, Shanghai...

Among these, there is skepticism about Geely's acquisition of the Volvo project. The negotiations have not gone deep; they have also begun to look promising. As the negotiations move forward, they gradually feel that the interests of the two sides are different and they give up halfway; what is more, some local governments already Geely signed an agreement and the staff of the two parties worked together. However, at the last moment, it was still shaken and there was a backlash.

On December 16, 2009, Tong Zhiyuan, a key player, joined the Volvo M&A team. As the former president of the Beijing Dai-Ke Benchi Company, Tong Zhiyuan’s joining was considered by outsiders to be a strong signal for the Volvo project to settle in Beijing.

This appointment means that Tong Zhiyuan will play the role of Volvo China project operator after completing the acquisition of Volvo, and will also be responsible for the coordination of Volvo with various departments after setting up in Beijing.

At that time, Geely and the Beijing Economic and Technological Development Zone had already initialed all the documents, and Geely had signed and sealed it, so that the approval was in place. However, in this section, there was a problem with the approval. According to a source, Beiqi wrote the local government directly and hoped to fully support the upcoming Beiqi, rather than foreign projects, and the Volvo project settled in Beijing.

However, many local governments that had previously negotiated extended their help. Geely chose to cooperate with Daqing City. On December 22nd, 2009, Beijing Geely Wanyuan International Investment Co., Ltd. (hereinafter referred to as “Jili Wanyuan”) was registered in Yizhuang, Beijing. This was the day before Geely announced that it had reached an agreement with Ford on the acquisition of Volvo key items. The representative is Tong Zhiyuan. The shareholders are Geely Kaisheng and Daqing State-owned Assets Management Co., Ltd. (hereinafter referred to as "Daqing State-owned Assets").

In fact, Geely Wanyuan, a financing platform formerly established by Geely and Beijing, does not need Daqing state-owned assets. The two parties will adopt a basic equity structure to solve Geely’s 1.2 billion U.S. dollar financing problem. Beijing’s economic and technological development The district will provide 4 billion yuan in financing. But after the settlement of Beijing was stopped, financing became a big problem. The intervention of Daqing State-owned assets solved Geely's urgent needs. Of course, this money also requires Geely's commitment.

In fact, until now, the Volvo project has been delivered, but the settlement has not yet been finalized. The long winter in Daqing and the weakness of the supporting system make it impossible for Volvo's vehicle manufacturing project to settle there.

And at the end of December 2009, when Daqing State-owned Assets became a shareholder of Geely Wanyuan, and paid 3 billion yuan for the entire acquisition, 3 billion yuan of financing did not completely solve Geely's problems. First of all, the money is not enough; Secondly, where Volvo projects are placed in the country is still a problem.

It is the above two issues that cannot be answered that the acquisition team turned the negotiation focus to Jiading District of Shanghai and reported to the Shanghai Municipal Government. In fact, before looking for the Shanghai Municipal Government, Geely and the Jiading District government have begun to take some action.

On February 3, 2010, Shanghai Jiaerwo Company was incorporated with a registered capital of 100 million yuan, of which Jiading Development Zone holds 60% and Jiading State-owned Assets holds 40%. The legal representative is Yu Jianhua, Party Secretary of the Shanghai Jiading Industrial Zone. After Geely Wanyuan, the second financing platform began to build.

On February 9, 2010, a special agreement was signed between Geely and Galveo. The agreement was named "The Geely Volvo Shanghai Project Framework Agreement." According to this agreement, after Geely acquired Volvo, China’s headquarters will be established in Shanghai’s Jiading District and a Volvo domestic factory will be established in the area.

However, when Galvo was founded, the Geely team had another worry: Will the previous situation arise: At the district level, the government has received support, but at the provincial and municipal levels, the government has not received approval? Shanghai already has Shanghai Auto (600104.SH). Will the government choose to support the second vehicle manufacturer?

On the eve of the Spring Festival in 2010, this framework agreement was put on the front desk of relevant departments of the Shanghai Municipal Government, and the entire M&A team had a long and difficult Spring Festival. They hoped that before the deadline, the Shanghai Municipal Government could do A decision is made.

On the other side, the Shanghai Municipal Government conducted a special study on Geely's projects, and the main leaders made instructions on the Volvo project: First, the introduction of Volvo projects will help improve the level of Shanghai's industries; Second, the introduction of the private economy will further optimize Shanghai. The economic structure based on state-owned assets; Third, support for a car project will form a healthy competition with the local Shanghai Auto, "to form the pattern of Tian Ji race."

In Shanghai, it took only two weeks to perform the full departmental approval. In fact, the deadline for signing the contract is so close. "Ford may have waited for us until March 31, but it will certainly not wait any longer. That is the deadline we have agreed. The entire merger and acquisition will follow the timetable strictly." Yu Liping told reporters.

Approved in place, on February 24, Shanghai Geely Zhaoyuan International Investment Co., Ltd. (hereinafter referred to as “Jili”) was incorporated and the shareholders were Geely Wanyuan and Jiaerwo, both of which contributed money and accounted for 87.65% of the shares respectively. 12.35%, the company legal person is Tong Zhiyuan.

Until the formal establishment of Geely Siu-Yuan, Geely's acquisition of Volvo's financing structure was settled. Geely, Daqing State-owned Assets, and Shanghai Jiaerwo, with capital contributions of RMB 4.1 billion, RMB 3 billion, and RMB 1 billion, respectively, with 51%, 37%, and 12% respectively. At this point, there are 26 days from the final agreement signed between Geely and Ford.

On August 2nd, out of the final 1.5 billion U.S. dollars in the acquisition of Volvo by Geely, there were 1.1 billion U.S. dollars from the aforementioned financing platform, 200 million U.S. dollars from the China Construction Bank London branch, and another 200 million U.S. dollars financing the Ford seller.

Just as the Shanghai municipal government made a timely decision, Li Shufu gave a financing plan and the IP negotiation was still in progress. Although the basic agreement on mergers and acquisitions was completed at the end of December 2009, the intellectual property rights in the tug-of-war between the two sides was still only one week before the formal signing.

According to Geely’s legal advisor and Kurdish Fuld’s famous lawyer, who has spent more than 30 years in mergers and acquisitions, commenting on the acquisition: “This is the most complicated merger and acquisition I have ever experienced.”

Yu Liping said: "Ford has acquired 10 years of ownership of Volvo and the intellectual property rights have been fully integrated. It needs to be re-disassembled from all aspects. This process is very complicated."

Li Shufu, who had just solved the financing problem, was once again trapped in intellectual property. Until March 19, when Li Shufu was interviewed by the media, he said: "If the transaction fails, the problem is not with Geely. Geely does not violate any part of the agreement." He hinted that the ball is now at the foot of Ford.

This is the voice that Li Shufu has rarely issued outside the control of financial public relations in the course of more than two years of M & A transactions. Li Shufu later added that the negotiation process is very difficult and Geely will do its best. He hopes to complete the transaction.

To this end, Geely asked Ford’s questions up to a thousand times, and the two sides conducted hundreds of expert meetings. “The project team often starts at 6am and sleeps at one or two in the evening.” Only due diligence covered seven languages, and thousands of pages were printed out. The entire intellectual property negotiations continued until March 21, when only seven days were left before the final signing.

On March 27, Geely and Volvo signed a contract the day before, Geely formally submitted the “Financing Structure Explanation” to the Ministry of Commerce and began to perform formal approval procedures. On July 28, the Ministry of Commerce completed the approval of the acquisition. The approval of the National Development and Reform Commission was earlier than that of the Ministry of Commerce on July 22.

Before the formal delivery, the merger and acquisition passed anti-monopoly investigations in more than 40 countries. On July 6th and July 15th, the acquisition project passed the anti-monopoly investigation of the EU and the United States, respectively. After that, it was not until delivery that Geely and Li Shufu met resistance again.

In the most difficult period, from February to March 2010, Li Shufu was once desperate. In an interview with the media, he said: “If I can choose again, I’m willing to choose a more free career: journalists, lawyers, poets, writers, Painter and singer."

At this time, Yu Liping privately talked about this merger and acquisition transaction, said that Li Shufu has the ability to complete the acquisition, in which Volvo is his, and Li Shufu's dedication and efforts will eventually be rewarded, and he can't escape.

Facts have proved that Yu Liping's words are correct. Volvo did not escape. Li Shufu used a merger to get the world to meet him. He met Geely and met Chinese car manufacturers.