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NINETY EIGHT REGENCY

Volvo unions demand answers as Geely buy looms

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Volvo unions demand answers as Geely buy looms

March 26, 2010 06:01 CET

STOCKHOLM (Reuters) – Unions at Ford Motor Co.'s Volvo Car Corporation on Thursday withheld their backing for a planned acquisition by Zhejiang Geely Holding Group, setting the stage for a potentially troublesome takeover by the Chinese automaker.

Ford and Zhejiang Geely, China's largest private carmaker and the parent of Hong Kong-listed Geely Automobile Holdings, are expected to sign an acquisition deal for Volvo Cars in the coming days.

But the Volvo unions said in a joint statement they had still not received any information about how the capital needs of Volvo would be met, nor about which investors were backing the deal and the composition of management of the company. Organized labor cannot block the deal, but the backing of employees and politically influential unions will be important if Zhejiang Geely's goal of pulling the Swedish carmaker out of the red by 2011 is to be achieved.

"With this total lack of information we can today not give our support to carrying out the deal," the unions said.

"Our responsibility toward our members demand that we get answers to our questions regarding the future of Volvo Car Corporation," they added.

The unions, which had previously expressed concerns over the potential acquisition by the Chinese firm, also demanded that a competent management team for the automaker be presented well before the deal, worth up to $2 billion, was finalized.

Zhejiang Geely said earlier this week that talks with Ford were on track toward a signing by the end of the month while the Financial Times reported an agreement might be concluded as early as Sunday.

The Chinese group was picked as preferred bidder for Volvo Cars in October last year, setting the stage for what could be the biggest acquisition to date by China's fast-growing auto sector.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100326/ANE/303259964/1257#ixzz0jINVkfTv

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