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Ford talks Volvo sale to Geely
By Cathy Chan |
February 6, 2009, Friday
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Print Edition
Print Edition
FORD Motor Co, seeking to raise cash to avoid a federal bailout, is in talks to sell its Volvo Car unit to China's Geely Automobile Holdings Ltd, according to three people familiar with the discussions.
Ford probably will get less than the US$6.4 billion it paid for Sweden-based Volvo in 1999, said one of the people, who declined to be identified because the preliminary talks are confidential. Ford has also approached China's Chery Automobile Co and Chongqing Chang'an Automobile Co, the people told Bloomberg News.
Michigan-based Ford lost a record US$14.6 billion last year and is trying to avoid asking for government loans to survive as United States auto sales plunge to the lowest level in almost 27 years. Geely founder Li Shufu, 45, may want to buy Ford's last European luxury brand after the addition of sedans to the Chinese auto maker boosted profit "significantly" last year.
"Whether it can consummate into a deal is a big question," said Alice Chong, an analyst at CIMB-GK Securities. Buying Volvo "would help Geely break into new markets and get better technology, but Geely may have to suffer short-term losses as sales in Europe and the US are collapsing."
Spokesmen for all the auto makers concerned did not comment.
Geely, China's largest privately owned car maker, first approached Ford about buying Volvo a year ago, before the US auto maker had decided to sell its Swedish auto unit, two of the people said. Preliminary talks began in December after Ford said it would consider selling the unit.
Geely has received permission from China's National Development and Reform Commission to study the acquisition, said the people. They said the auto maker has already got pledges from Export-Import Bank of China to provide the financing for the acquisition.
"Chinese auto makers want to tap foreign rivals' resources in technical development," said Zhang Xin, an analyst at Guotai Jun'an Securities Co in Beijing.
Ford probably will get less than the US$6.4 billion it paid for Sweden-based Volvo in 1999, said one of the people, who declined to be identified because the preliminary talks are confidential. Ford has also approached China's Chery Automobile Co and Chongqing Chang'an Automobile Co, the people told Bloomberg News.
Michigan-based Ford lost a record US$14.6 billion last year and is trying to avoid asking for government loans to survive as United States auto sales plunge to the lowest level in almost 27 years. Geely founder Li Shufu, 45, may want to buy Ford's last European luxury brand after the addition of sedans to the Chinese auto maker boosted profit "significantly" last year.
"Whether it can consummate into a deal is a big question," said Alice Chong, an analyst at CIMB-GK Securities. Buying Volvo "would help Geely break into new markets and get better technology, but Geely may have to suffer short-term losses as sales in Europe and the US are collapsing."
Spokesmen for all the auto makers concerned did not comment.
Geely, China's largest privately owned car maker, first approached Ford about buying Volvo a year ago, before the US auto maker had decided to sell its Swedish auto unit, two of the people said. Preliminary talks began in December after Ford said it would consider selling the unit.
Geely has received permission from China's National Development and Reform Commission to study the acquisition, said the people. They said the auto maker has already got pledges from Export-Import Bank of China to provide the financing for the acquisition.
"Chinese auto makers want to tap foreign rivals' resources in technical development," said Zhang Xin, an analyst at Guotai Jun'an Securities Co in Beijing.
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