China's Geely up, bucking market, on parent's Volvo bid

HONG KONG/SHANGHAI Oct 29 (Reuters) - Shares in Geely Automobile Holdings (0175.HK) rose 4.5 percent on Thursday, even as the broader market slipped, after its parent was named by Ford Motor (F.N) as the preferred bidder for its Volvo car unit.

Ford named Zhejiang Geely Holding Group late on Wednesday but did not disclose a possible sale price in what could lead to the biggest overseas acquisition by China's fast-growing auto sector. [ID:nLS682068]

Geely shares rose to a high of HK$3.0 before paring gains to 2.4 percent at HK$2.94, beating the benchmark Hang Seng Index .HSI, which was down 2.19 percent at 0209 GMT.

The stock has more than quadrupled this year on the Volvo hope and strong car sales in China, as well as an investment by Goldman Sachs (GS.N) in the company's convertible bonds. [ID:nHKG311594]

Media reports suggested the price tag for Volvo could be closer to $2 billion than the $6.45 billion Ford paid for the Swedish car maker in 1999.

"I think the market is still divided on the Geely deal," said Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management.

"If its parent indeed gets Volvo and the deal serves it well, the listed firm would benefit tremendously, but if they are unable to handle Volvo and things happen just like they did in the SAIC-Ssangyong deal, the listed company will suffer," he added.

SAIC Motor Corp (600104.SS), China's biggest automaker, bought 51 percent of South Korea's loss-making Ssangyong Motor (003620.KS), but was later forced to write off its investment. (Reporting by Fang Yan and Alison Leung; Editing by Jonathan Hopfner)