Stockholm/Beijing  — Volvo Cars owner Li Shufu on Monday set out to combine the Swedish carmaker he bought in 2010 with his Hong Kong-listed automobile unit to create a company with the scale to compete in a rapidly consolidating global market.

Volvo, wholly owned by Li’s Geely Group, will start a process to merge with publicly traded Geely Automobile Holdings, according to a statement. The enlarged company would be listed in Stockholm as well as Hong Kong, where Geely Automobile trades now. The new structure could be in place by the end of 2020, a Volvo spokesperson said.

The deal would unify the bulk of billionaire Li’s growing stable of automotive brands and create a company worth about $30bn, on par with Ford Motor. Since the Chinese businessman bought Volvo Cars, the company has doubled sales while growing rapidly in China. Li, who is also Daimler’s largest shareholder, has championed consolidation as a way for vehicle makers to pool resources for initiatives such as electrification and automated driving.

Global deal making has picked up in the past year as Volkswagen  and Ford agreed to co-operate and Fiat Chrysler Automobiles   is to merge with France’s PSA Group, owner of the Peugeot brand.

Market appetite

A joint listing with Geely Automobile would mark a creative way to list Volvo Cars, which delayed plans for an IPO in 2018, citing the impact of trade tensions on market appetite.

Geely Automotive commands a market value of about $16bn in Hong Kong, while Volvo targeted a range of $16bn to $32bn before it dropped its IPO plans, people familiar with the matter said at the time. Investors were only willing to pay between $12bn and $18bn, those people said.

Volvo Car’s euro bonds maturing 2025 advanced to 103.6, their highest intraday level since January 27, at midday in Stockholm. The senior unsecured notes are rated one step below investment grade.

Volvo was started in 1926 as a project within ballbearing maker SKF, which wanted to show how useful its products could be in cars. The fledgling company was listed in Stockholm in 1935 before expanding to become a sprawling conglomerate that also made trucks and construction equipment, with stakes in pharmaceutical companies and breweries.

After a failed attempt at merging with France’s Renault, the Volvo group sold the passenger-car business to Ford Motor in 1999 to focus on making trucks and buses. Geely took over the business from Ford in the wake of the financial crisis just over a decade later.

Moving upmarket

Geely, which has been the top-selling Chinese car brand for three consecutive years, has sought to move upmarket through closer co-operation with its Swedish sister company. The new entity would also comprise Lynk & Company, which makes cars using Volvo’s CMA platform, and Polestar, a joint-venture that aspires to take on Tesla’s Model 3 with its first all-electric model, announced past year.

The new company’s combined annual shipments would surpass 2-million, based on data from 2019, rivalling shipments of BMW-branded cars.

Under Geely, Volvo has seen a resurgence of the brand led by sales of the popular SUV models that made up more than half of its sales past year. Deliveries in China have risen fivefold under Li’s ownership, and the company set up three assembly plants and an engine unit in the country.

Li also owns the London EV Company, famous for its taxis, holds a majority stake in Lotus Cars and bought a stake in the separate truck-making company, Volvo Group in 2018.

The car companies have already moved towards integration in response to industry challenges. In October, Volvo Cars announced that it will form a joint venture with Geely for the development of traditional combustion engines that could be operational at the end of the year.