Geely Sought Stake in Fuji Heavy, Sources Say
Volvo Car Corp.'s Chinese owner offered to take a large minority stake in the Japanese maker of Subaru cars. The offer, which was never accepted, illustrates Zhejiang Geely Holding Group Co.'s efforts to gain technology to improve its cars.
Two sources with direct knowledge of the matter said Geely offered to buy a 20 percent stake in Japan's Fuji Heavy Industries Ltd. late last year through an investment banking intermediary.
If the bid had succeeded, it could have paved the way for a joint-venture company in China to produce Subarus that now must be brought in from abroad.
By acquiring Volvo and bidding for Fuji Heavy, Geely wanted to use those companies' technology, design and manufacturing expertise to improve its cars.
Volvo is a premium brand and Geely's brands in China are affordable low-end brands. That leaves a midmarket gap in Geely's lineup, said Yale Zhang, head of Automotive Foresight, a Shanghai consulting firm.
Geely's interest in Fuji Heavy "sounds like a good strategy," Zhang said. "Fuji Heavy could have filled the gap in the middle of Geely's product offerings."
Chasing Chery
A 20 percent stake would have made the Hangzhou automaker the biggest shareholder in Fuji Heavy, ahead of Toyota Motor Corp., which has a 16.5 percent stake.
The sources said Fuji Heavy never responded to the offer.
Kenta Matsumoto, a Tokyo spokesman for Fuji Heavy, said he was unaware of an acquisition offer from Geely. A Geely spokesman declined to comment.
Fuji Heavy, known for its all-wheel-drive technology, had applied for a joint venture to produce cars in China with Chery Automobile Co., which has no foreign partner.
China requires foreign automakers to partner with a local company with a stake of as much as 50 percent to build vehicles in China for local consumption.
Biggest shareholder
Beijing objected to the move since it viewed Toyota Motor Corp. as effectively controlling Fuji Heavy. Toyota already has two local Chinese partners, the maximum number of joint ventures allowed for a foreign automaker in China.
This year, Chery announced that it picked Jaguar Land Rover, a unit of Indian group Tata Motors, as a possible joint-venture partner.
On Tuesday, Fuji Heavy executives said in Tokyo that the company no longer expected to produce vehicles in China during a five-year growth plan that runs until March 2016. The company lowered its global sales target for the final year by 50,000 vehicles.
Geely's offer, according to the knowledgeable individuals, was aimed at overtaking Toyota as the largest shareholder in Fuji Heavy, making it possible for the Chinese government to give the necessary blessing for Geely and Fuji Heavy to form a China joint venture.
Geely founder and chairman Li Shufu, who also is Volvo's chairman, was willing to reduce Geely's stake in Fuji Heavy once the joint venture was approved, the individuals said.
It was not immediately clear whether Geely had talked to Toyota before extending the acquisition offer to Fuji Heavy. Toyota spokesmen were not immediately available for comment.
If the bid had succeeded, it could have paved the way for a joint-venture company in China to produce Subarus that now must be brought in from abroad.
By acquiring Volvo and bidding for Fuji Heavy, Geely wanted to use those companies' technology, design and manufacturing expertise to improve its cars.
Volvo is a premium brand and Geely's brands in China are affordable low-end brands. That leaves a midmarket gap in Geely's lineup, said Yale Zhang, head of Automotive Foresight, a Shanghai consulting firm.
Geely's interest in Fuji Heavy "sounds like a good strategy," Zhang said. "Fuji Heavy could have filled the gap in the middle of Geely's product offerings."
Chasing Chery
A 20 percent stake would have made the Hangzhou automaker the biggest shareholder in Fuji Heavy, ahead of Toyota Motor Corp., which has a 16.5 percent stake.
The sources said Fuji Heavy never responded to the offer.
Kenta Matsumoto, a Tokyo spokesman for Fuji Heavy, said he was unaware of an acquisition offer from Geely. A Geely spokesman declined to comment.
Fuji Heavy, known for its all-wheel-drive technology, had applied for a joint venture to produce cars in China with Chery Automobile Co., which has no foreign partner.
China requires foreign automakers to partner with a local company with a stake of as much as 50 percent to build vehicles in China for local consumption.
Biggest shareholder
Beijing objected to the move since it viewed Toyota Motor Corp. as effectively controlling Fuji Heavy. Toyota already has two local Chinese partners, the maximum number of joint ventures allowed for a foreign automaker in China.
This year, Chery announced that it picked Jaguar Land Rover, a unit of Indian group Tata Motors, as a possible joint-venture partner.
On Tuesday, Fuji Heavy executives said in Tokyo that the company no longer expected to produce vehicles in China during a five-year growth plan that runs until March 2016. The company lowered its global sales target for the final year by 50,000 vehicles.
Geely's offer, according to the knowledgeable individuals, was aimed at overtaking Toyota as the largest shareholder in Fuji Heavy, making it possible for the Chinese government to give the necessary blessing for Geely and Fuji Heavy to form a China joint venture.
Geely founder and chairman Li Shufu, who also is Volvo's chairman, was willing to reduce Geely's stake in Fuji Heavy once the joint venture was approved, the individuals said.
It was not immediately clear whether Geely had talked to Toyota before extending the acquisition offer to Fuji Heavy. Toyota spokesmen were not immediately available for comment.
