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Geely Auto mulls new Saab bid

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Geely Auto mulls new Saab bid

Chinese company's parent is top bidder for Volvo

DECEMBER 7, 2009 06:01 CET

HONG KONG (Reuters) -- China's Geely Automobile Holdings Ltd. wants to grow through acquisitions and one of them could be General Motors Co.'s Saab unit.

Geely had been in talks with GM on Saab, but negotiations ended without result some time ago.

Asked whether the talks would be revived, Lawrence Ang, an executive director of Geely Auto, said: "Who knows?"

Geely Auto, whose parent is bidding for Ford Motor Co.'s Volvo car unit, added on Monday that it is interested in projects including parts and engines.

"The battered U.S. and European auto markets continue to provide us with buying opportunities," Ang told reporters after the company's shareholder meeting.

Shares of Geely rose 3.2 percent on Monday, beating a 0.8 percent loss on the benchmark Hang Seng Index.

Zhejiang Geely Holdings, which had been named by Ford as the preferred bidder for its money-losing Swedish unit Volvo, was seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid, sources told Reuters in December.

Geely Auto, which used to make and sell some of China's cheapest cars, raised $334 million earlier this year by issuing convertible bonds and warrants to an affiliate of Goldman Sachs. Part of the proceeds would be used to fund acquisition plans, Ang said.

Geely Auto also aimed to lift capital spending by 25 percent to 43 percent next year to about 1 billion yuan (about $146.4 million), initially for expanding capacity and building a new model platform, he said.

The company was optimistic about China's car market and aimed to sell 400,000 vehicles next year, up from a target of 300,000 for 2009, Ang said.

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That would be something if Saab and Volvo were the same company, though it does make sense. The Economist was right: there will be further and further consolidation in the auto market.

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