After SAIC's acquisition of Volvo was denied, on July 1st it was reported that Dongfeng had acquired Volvo, and in 2007, there was rumor that FAW Group had acquired Chrysler and eventually it was over.
After experiencing the development of reform and opening up for 20-30 years, Chinese automotive local companies have already made considerable gains in foreign mergers and acquisitions, mainly because SAIC has acquired Ssangyong Motor and Rover brand.
What will happen if SAIC and other Chinese companies purchase Volvo? What will you lose again?
Of course, the premise of all the discussion is that the former media reported that Ford was forced to sell Volvo because it was stuck in its own operating situation.
Is there 8 billion US dollars?
According to Ford’s acquisition of the Volvo brand price of more than 6.4 billion U.S. dollars in 1999, after nine years of operation and development, as well as the urgency of Ford’s sale, the current Ford sale price for Volvo should be between 8 billion and 10 billion U.S. dollars.
SAIC’s acquisition of Rover’s investment was 67 million pounds, plus Nanjing’s 53 million pounds. It invested a total of 120 million pounds, equivalent to about 200 million U.S. dollars.
So if SAIC acquires Volvo, can it get so much money?
According to Shanghai Automotive's price-earnings ratio of 20 times, Shanghai Automotive's total market value is about 70 billion yuan, equivalent to 10 billion US dollars up and down.
It can be said that the total market value of SAIC-listed companies is not much more than that of Volvo sold.
And if Ford sells Volvo, it certainly needs a lot of timely realizable assets, in order to get Ford to get rid of the current difficulties.
How can Shanghai Automotive, with a total market value of only $10 billion, have so much cash? At the current scale, there may not be any channels to support such large financing needs. What Shanghai Automotive can't do is hard for other auto groups to do.
8 billion US dollars is worth?
Even with such a sum of money, can we say that the acquisition must be a win-win outcome? At the very least, is it beneficial to SAIC or other Chinese domestic auto companies?
SAIC's acquisition of Ssangyong and the acquisition of Rover are two completely different paths. After Ssangyong was acquired, Ssangyong Brand was retained, but Rover was replaced by localized Roewe and MG.
Volvo and the above two results are certainly different.
Due to the great value of the Volvo brand and Volvo's current market sales, an independent Volvo brand is in the interest of the acquirer.
China will receive Volvo's technology and platform support. Even as much as the original Volkswagen like to take the Audi model intact, affixed to the Chinese auto companies own brand to market.
From this point of view, SAIC or Dongfeng seems to be able to become another German public. In actual fact, before the acquisition of Audi, Volkswagen had a considerable market base. This was not the case with Chinese auto companies. Even in the domestic market, it still did not show particularly strong competitiveness.
The best way to examine the value of an investment is whether the same investment, if used for other purposes, will gain more value.
If we use this investment to recruit talent globally, what will be the outcome? Chinese auto companies lack technology and, ultimately, they lack talent.
In China, there has always been a dispute between self-owned and foreign companies. In fact, the real difference between the two sides lies in the lack of historical accumulation and accumulation of technology. The key to this is the lack of talent. It is believed that with the continuous investment of 8 billion U.S. dollars in talents, the development of an auto company will undergo a qualitative change.
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