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China approves Geely's Volvo car purchase from Ford

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China approves Geely's Volvo car purchase from Ford

July 29, 2010 - 6:24 am ET

BEIJING (Bloomberg) -- China's Ministry of Commerce said it has approved Zhejiang Geely Holding Group Co.'s purchase of Ford Motor Co.'s Volvo car unit, paving the way for completion of the $1.8 billion acquisition agreed by the two companies in March.

The ministry signed off the deal recently, a ministry spokesman said by telephone today from Beijing.

Geely agreed on March 28 to buy the Volvo car business from Ford, marking the biggest overseas acquisition by a Chinese automaker. Volvo is the latest premium European brand to be sold off by Ford CEO Alan Mulally, who has divested Aston Martin, Land Rover and Jaguar since joining the carmaker from Boeing Co. in 2006.

Geely Automobile Holdings Ltd., Geely's Hong Kong traded unit, rose by 11.3 percent, the most in five months, today to close at HK$2.95. The stock has fallen 31 percent this year, compared with the benchmark Hang Seng Index's 3.6 percent decline.

Ning Shuyong, a spokesman for Geely, declined to make an immediate comment as he was in a meeting.

Ford plans to complete its sale of Volvo to Geely next week, according to two people familiar with the plans. Ford and Geely executives are aiming to close the sale, pending final regulatory approvals and financing, said the people, who asked not to be identified revealing internal plans.

Ford has said it will continue to supply Volvo with engines, transmissions and other vehicle components. It also agreed to provide engineering and technology support and access to tooling for common components for an unspecified period.

Volvo Car has about 20,000 employees worldwide, including almost 14,000 in Sweden. The unit had pretax profit of $53 million in the second quarter, compared with a $237 million loss a year earlier, Ford said last week.

Selling Volvo would complete Mulally's strategy of exiting European luxury lines to focus on Ford's namesake brand.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100729/COPY01/307299936/1131#ixzz0v7DjiEdi

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China approves Geely-Volvo deal

By Andrew Ganz

Zhejiang Geely Holding Group has been approved to purchase Volvo from Ford for $1.8 billion by China’s Ministry of Commerce and its National Development and Reform Commission. Approval from the two government agencies was crucial to Geely’s plan to acquire the overseas manufacturer in China’s highly protective business climate.

“We have received all approvals required from the central government,” Ning Shuyong a spokesman from Geely, told Reuters. “We are currently working on closing the deal.”

Neither Geely nor Volvo has confirmed when the deal is likely to close, although sources have said that the paperwork is in place and that Ford could officially divest itself of Volvo by the end of next week.

Crucial: Chinese factory

Volvo CEO Stephen Odell says that the automaker’s success in the long run will be tied to Geely’s plans to open a factory in China. Odell will vacate his post at Volvo to take a the top position at Ford of Europe after the sale is complete.

Volvo currently uses a Ford-Chongqing Changan Automobile joint venture facility to assemble its S40 and a long-wheelbase version of its S80, the S80L (pictured), for the Chinese market. Geely has said that it plans to build a new assembly plant for Volvo and that it is having discussions with governments across the country to narrow down a location.

Odell isn’t privy to Geely’s plans since his days at Volvo are numbered, but he says that local assembly will be essential if the brand wants to succeed in the rapidly-growing Chinese market.



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