Essay: Impact of Acquisition on Shareholders

Sample Essay

If we talk about shareholding from the viewpoint of Geely, it is great news for the stockholders gaining much more on their capital investments. From the overall scenario, Geely has been benefiting more than does the Ford. Shares of Geely increased as a result of Volvo’s acquisition while the investments get more diversified in the case of Geely.

As a strategic step, the technology sharing between Ford and Volvo has been there for over a decade, which later posed a great threat to Ford from losing technical secrets. Due to a rapid change in the business strategy of Geely after acquiring Volvo, it became difficult for Geely to manage its administrative and operational activities. Another setback was received from the Hong Kong stock exchange where shareholders of Geely opposed the deal because of an increase in debts. Shareholders’ fears were, nonetheless, not unjustified, because it was a time when Geely had already invested a lot in the local market expansion. Geely Automobile declared to the public that it would not make any attempt to buy Volvo but the parent group will. This is however believed that if a nonlisted company bid the deal, it would make it less transparent and dubious. Both parties were very much interested in the deal to be finalized as soon as possible. Ford seemed more willing due to the doubts that it would be bankrupt if money is not injected in the business. Shareholders of Volvo witnessed a setback comparing Ford’s $6 billion deal to buy Volvo with a $2 billion bid by Geely to acquire Volvo (Liu, 2009).

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