Ford Motor Company sells Volvo to Zhejiang Geely Holding Group Company Limited
It’s official – Volvo has been sold again. Volvo is now the first “Big Auto” brand to be purchased by a Chinese company. Zhejiang Geely Holding Group Company Limited, or just “Geely” for short, said in a statement that “Geely intends to preserve Volvo Cars’ existing manufacturing facilities in Sweden and Belgium, while exploring opportunities to manufacture Volvo vehicles in new production facilities to be built in China for the local market.” A press release on Ford’s website spells out some more of the details. Having bought Volvo for $6.45 Billion in 1999, Ford takes a huge loss on their investment, even just looking at the purchase price & the sale price, not counting operating losses, opportunity costs, etc. Perhaps this deal will help Volvo capitalize on the huge Chinese automotive market and bring the brand back to profitability.
Here’s more from the Ford website:
The sale is expected to close in the third quarter of 2010, and is subject to customary closing conditions, including receipt of applicable regulatory approvals.The purchase price for Volvo Cars and related assets (primarily intellectual property) is $1.8 billion (U.S.), which will be paid in the form of a note in the amount of $200 million (U.S.), and the remainder in cash. The cash portion of the purchase price will be adjusted at close for customary purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect of which could be a significant decrease in the cash proceeds to Ford.“Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely’s ownership,” said Alan Mulally, Ford’s president and CEO. “At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world.”Ford will continue to cooperate with Volvo Cars in several areas after the sale has been completed in order to ensure a smooth transition, but will not retain any ownership in the Volvo Cars business.
* Image from the Detroit News at http://www.detnews.com/article/20100329/AUTO01/3290335/1148/Ford–Geely-agree-to-$1.8B-Volvo-deal