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Shares rev up as Geely explores merger with Volvo Cars

Marriage could pave way to Stockholm listing and improved access to technology

A logo of Geely automobile company. Markets responded in kind to Geely's announcement, sending its Hong Kong-listed shares up almost as much as 12% during Tuesday trading.    © Reuters

HONG KONG (Nikkei Markets) -- Shares of Geely Automobile Holdings surged on expectations that a potential merger with Volvo Cars would bolster its standing among Chinese automakers, improving profitability as well as access to technology and funding.

A decade after snapping up Volvo Cars from Ford Motor for $1.8 billion in the aftermath of the global financial crisis and giving the Swedish carmaker a fresh lease of life, Chinese billionaire and Geely Chairman Li Shufu is looking at a formal merger. The marriage is expected to bring cost synergies and set the combined entity up for "new technology development to face the challenges in the future," Geely informed the Hong Kong stock exchange late on Monday.

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