Geely Holding Group Co.

Oct. 29 (Bloomberg) -- Geely Holding Group Co. was named the “preferred bidder” for Ford Motor Co.’s Volvo Car Corp. unit, paving the way for China’s first acquisition of a major overseas automaker.Geely is “very glad to see that we have made progress in the negotiations,” founder Li Shufu said in a statement posted on the company’s Web site yesterday. “If we reach a final agreement, Geely will protect and strengthen Volvo’s traditional status as a world-class brand.”Talks may still stumble as Ford and Geely are yet to resolve protection for intellectual-property rights, a person familiar with the situation said. China’s biggest automaker outside of state control wants to buy Sweden-based Volvo to expand overseas as rising domestic competition crimps margins.“To own Volvo’s brand and technology would certainly be beneficial for Geely,” said Liu Lixi, a Shanghai-based analyst at Northeast Securities Co. “But Chinese automakers don’t have the experience to manage a foreign brand, especially one this big.”Geely has support from Chinese banks for the deal, according to the statement. No specific lenders were named. Geely’s group is prepared to pay about $2 billion for Volvo, less than a third of what Ford paid a decade ago, people familiar with the talks have said.“Geely has the potential to be a responsible future owner of Volvo,” Ford Chief Financial Officer Lewis Booth said. The Dearborn, Michigan-based company has no plan to retain a stake in Volvo and has “no specific timeline to conclude the discussions.”Hummer, OpelGeely Automobile Holdings Ltd., Geely’s Hong Kong-listed unit, rose 0.7 percent to HK$2.89 at 10:34 a.m. in trading in the city. Geely Automobile isn’t directly involved in the Volvo deal and won’t provide funding, the unit said in a statement last night, adding it may cooperate with Volvo in the future.Sichuan Tengzhong Heavy Industrial Machinery Co. is also in the process of buying General Motors Co.’s Hummer brand. Beijing Automotive Industry Holding Co. bid for GM’s Opel unit as Chinese automakers seek to boost margins by selling more expensive models overseas. China’s domestic auto market is dominated by low-cost vehicles, undermining the benefit of a 42 percent jump in passenger-car sales this year.Beijing Auto failed in its bid to buy Opel because of concerns about intellectual-property rights, Chairman Xu Heyi said in July. Ford is also seeking safeguards in the Volvo deal as it will continue to provide components after the sale.Overseas StrugglesA deal “would need to take into account the significant connections between Ford and Volvo in terms of continuing component supply, engineering and manufacturing,” John Fleming, chairman of Ford of Europe and Volvo, said in a statement.Chinese automakers have struggled with previous overseas deals. Ssangyong Motor Co., controlled by SAIC Motor Corp., China’s biggest carmaker, entered receivership in February after sales plunged at the Korean sport-utility vehicle maker.SAIC also bought rights for cars designed by the U.K.’s MG Rover Group Ltd. in 2005 to temper its reliance on partners GM and Volkswagen AG. Last year, GM and Volkswagen vehicles still accounted for more than 90 percent of SAIC’s sales.Geely first approached Ford about buying Volvo in the summer of 2008, people familiar with the matter have said. Ford also talked to Beijing Automotive Industry Holding Co. and the Crown Group, led by former Ford director Michael Dingman, son James Dingman and Shamel Rushwin, a former manufacturing and labor executive at the automaker, the people said.For Related News and Information: Top transportation stories: TRNT Link to Company News: F US CN Ford divisions: F US PGEO Income statement summary: F US FA 16 Chart of revenue by region: F US PGEO 2 CHART