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Ford optimistic on Volvo sale

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Ford optimistic on Volvo sale

Anticipation escalates over $1.8B deal as companies plan announcement in Sweden

Bryce G. Hoffman / The Detroit News

Ford Motor Co. remains confident that it will finalize an agreement to sell its Swedish luxury brand, Volvo, to China's Zhejiang Geely Holding Group next week.

But what had been planned as a low-key announcement is rapidly escalating into a major international event: Chinese Vice President Xi Jinping is now scheduled to be on hand to sign the deal, according to sources close to the negotiations.

"We're still working toward reaching a definitive sales agreement by the end of this month," Ford spokesman Mark Truby said Wednesday.

Volvo spokesman Olle Axelson confirmed that preparations are under way for an announcement at the company's headquarters in Goteborg, where he said the mood is cautiously optimistic.

"People are anxious to move forward," he said.

"Things are looking good for Volvo right now, and we want to get on with selling our cars."

Ford began shopping Volvo shortly after it completed the sale of its British luxury brands, Jaguar and Land Rover, to India's Tata Motors in 2008.

But the global credit crisis made it nearly impossible for prospective buyers to secure the necessary capital.

The Dearborn automaker announced in October that Geely was its "preferred bidder" for Volvo.

Since then, work on things such as future products has been largely on hold in Sweden, pending the outcome of the deal.

Ford Chief Financial Officer Lewis Booth is expected to fly to Sweden this weekend.

The Financial Times has reported that Geely will pay Ford $1.8 billion for Volvo.

China's National Business Daily reports that the Geely registered to handle the acquisition already has secured sufficient funding for a deal at that price, which is far less than Ford originally hoped to get for the brand.

But Volvo's sales have suffered along with the rest of the global automobile industry, and it has defied Ford's efforts to turn it into a profitable operation.

Ford has made progress, however: Last year, Volvo lost $653 million, $812 million less than it lost in 2008.

Leaked reports in the Chinese media that suggest talks between the two companies have hit a snag are just "last minute arm-twisting" by Geely, sources told The Detroit News.

Sources expect Volvo's new parent to keep the company's headquarters in Sweden and affirm its commitment to supporting new product development.

But other details about the ownership structure and the make up of the company's board of directors likely will wait until the deal closes this summer.

Volvo enjoys one of the most positive brand images in the world, a fact that has led some analysts to question the wisdom of Ford's decision to sell it. Ford CEO Alan Mulally wants to focus on fixing Ford's own problems, not those of foreign subsidiaries.

From The Detroit News: http://detnews.com/article/20100325/AUTO01/3250362/1148/Ford-optimistic-on-Volvo-sale#ixzz0jBvnIs5s

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