The news at a glance
Ford: Volvo finds a Chinese buyer; China: Long sentences in Rio Tinto bribery case; Insider trading: Hedge fund arrests rock London; Bailouts: U.S. to sell Citi shares; Newspapers: News Corp. builds a pay wall in Britain
Ford: Volvo finds a Chinese buyer
Chinese automaker Zhejiang Geely Holdings has agreed to buy Volvo from Ford for $1.8 billion, “in the clearest confirmation yet of China’s global ambitions in the auto industry,” said Keith Bradsher in The New York Times. Ford, which paid $6 billion for Volvo in 1999, sold the automaker to focus on its core brands. Geely says it will continue to produce Volvos in Sweden, but will build additional plants in China, which is now the world’s largest auto market. Analysts say that buying an upscale brand like Volvo is “the fastest way for a company like Geely to move up from making cars for the masses to cars for the affluent.”
Geely’s CEO, Li Shufu, “is just the kind of larger-than-life figure” the Chinese car industry needs as it prepares to take on the world, said Patti Waldmeir and John Reed in the Financial Times. A crafty negotiator, Li “tends to dream big and worry about execution later,” associates say. And he has big dreams for Volvo, whose revenues are five times Geely’s own. Li aims to double the brand’s annual sales to 600,000 units by 2015.
China: Long sentences in Rio Tinto bribery case
A Chinese court has sentenced four employees of Anglo-Australian mining company Rio Tinto to long prison sentences after convicting them of accepting bribes and stealing commercial secrets, said Elaine Kurtenbach in the Associated Press. The four admitted to accepting bribes from Chinese steel mills seeking “preferential prices” for iron ore, the key raw material in steel. They drew sentences of up to 14 years, harsher than expected. Rio Tinto, which feared losing its important Chinese business ties, fired the four after they were convicted. The sentences nonetheless caused diplomatic tensions between China and Australia, and alarmed other companies doing business there.
Insider trading: Hedge fund arrests rock London
Britain’s Financial Services Authority last week arrested seven people, including employees of Deutsche Bank and Moore Capital, one of Britain’s biggest hedge funds, on charges of insider trading, said Caroline Binham and Gavin Finch in Bloomberg.com. Legal observers said the arrests showed that British regulators are stepping up scrutiny of some of the biggest names in London’s financial community. Authorities allege that those arrested had passed one another confidential tips on planned mergers and earnings announcements.
Bailouts: U.S. to sell Citi shares
The U.S. Treasury will sell its 27 percent stake in Citigroup, which it obtained for bailing out the giant bank, said David Cho in The Washington Post. At current prices, shares would fetch $33 billion, netting the U.S. $8 billion, “by far the largest profit returned from any firm that accepted bailout funds.” The Treasury obtained the shares last September, when it converted a $25 billion loan to Citi to common stock.
Newspapers: News Corp. builds a pay wall in Britain
News International, the British arm of Rupert Murdoch’s News Corp., has announced plans to charge online readers of the London Times and Sunday Times, said Matthew Saltmarsh in The New York Times. Beginning in June, the two newspapers’ combined website will be available to readers for about $3 per week. “Media companies are trying to extract new sources of revenue from online readers,” despite the risk that the access charges “could alienate some.”