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Ford sells Volvo to Geely for $1.8 billion

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Ford sells Volvo to Geely for $1.8 billion

03/28/2010, 11:39 AMBY NICK AZIZ

Ford on Sunday announced it has entered into what is describes as a “definitive agreement” to sell the Volvo brand to China’s Zhejiang Geely Holding Group, otherwise known in the industry simply as Geely.

Ford indicates the sale will close in the third quarter of 2010 and is subject to applicable regulatory approvals. Geely has agreed to pay $1.8 billion for the Swedish automaker, which was acquired by Ford in 1999 for $6.45 billion.

The sale of Volvo represents the final step in Ford’s dismantlement of its Premier Automotive Group, which previously included Aston Martin, Jaguar, and Land Rover. Ford sold Aston to a consortium of inventors in 2007 and divested itself of Jaguar and Land Rover in 2008.

In a statement to the press, Ford CEO Alan Mulally indicated the sale would “allow us to further sharpen our focus on building the Ford brand around the world.” Ford will continue to provide Volvo with various components, presumably until the automaker can develop proprietary replacements.



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Geely to buy Volvo from Ford for $1.8 billion

Bryce Hoffman / The Detroit News

Ford Motor Co. has inked a definitive agreement to sell its Swedish luxury brand, Volvo, to China's Zhejiang Geely Holding Group Co. for $1.8 billion.

The deal was signed Sunday at Volvo's headquarters in Gothenburg, Sweden, by Geely Chairman Li Shufu, and Ford's Chief Financial Officer Lewis Booth. Witnessing the ceremony were Li Yizhong, minister of industry and information technology of the People's Republic of China, and Maud Olofsson, Swedish deputy prime minister and minister for enterprise and energy.

"We think it's a fair price for a good business, and yes, we're happy with the deal we've achieved with Geely," Booth said. "Volvo can continue to build its business and return to profitability."

Struggling to make Volvo profitable, Ford had come to view the brand as a distraction.

"China, the largest car market in the world, will become Volvo's second home market. Volvo will be uniquely positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market," said Geely's chairman.

He confirmed that Geely has secured sufficient working capital to fund Volvo's ongoing operations.

"Volvo is a great brand with an excellent product lineup," said Ford CEO Alan Mulally in a statement. "This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership."

The proceeds of the sale will be used to help fund Ford's ongoing restructuring.

The sale, which is expected to close in the third quarter pending regulatory approval, covers all of Volvo's assets, including intellectual property. Ford will also maintain supply and research-and-development relationships with Volvo.

Volvo will continue to produce cars in Sweden and Belgium, but Geely also plans to produce cars in China under the Volvo name.

"We are pleased to have reached this agreement with Ford, enabling us to safeguard and strengthen Volvo's renowned brand heritage," Li said. "This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design."

From The Detroit News:$1.8-billion#ixzz0jVuBw1lM


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