Geely seals Volvo deal for US$1.8b
By Louise Nordstrom |
March 29, 2010, Monday
|
Print Edition
Print Edition
ZHEJIANG Geely Holding Group signed a binding deal yesterday to buy Ford Motor Co's Volvo Cars unit for US$1.8 billion, allowing the private Chinese auto maker to expand its foothold in Europe.
The stock purchase agreement is subject to regulatory approvals and is expected to be completed in the third quarter, representatives of the two auto makers said as they presented the deal at a news conference at Volvo Cars headquarters in Goteborg, on Sweden's west coast.
The agreement was signed by Geely's Chairman Li Shufu, and Ford Chief Financial Officer Lewis Booth, and witnessed by Li Yizhong, the Chinese minister of industry and information technology, as well as Swedish Minister for Enterprise and Energy Maud Olofsson.
The transaction will be made through a US$200 million note, while the remainder will be paid out in cash, Booth said.
The deal also covers further agreements on intellectual property rights, supply, and research and development arrangements between Volvo Cars, Geely and Ford.
In a statement, Geely said it has secured all the financing necessary to complete the deal, as well as "significant working capital facilities to fund Volvo Cars' ongoing business."
Geely said it aims to keep Volvo's existing manufacturing facilities in Sweden and Belgium, but that it will also explore production opportunities in China.
"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," Li said.
Ford has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.
As Western auto makers unload unprofitable assets, they are finding keen buyers in Asia.
In 2008, Ford sold its Jaguar and Land Rover brands to India's Tata Motors Ltd for US$1.7 billion.
General Motors Co tried to sell its rugged Hummer brand to a private Chinese heavy equipment maker, but it is now winding that brand down as the deal collapsed.
The stock purchase agreement is subject to regulatory approvals and is expected to be completed in the third quarter, representatives of the two auto makers said as they presented the deal at a news conference at Volvo Cars headquarters in Goteborg, on Sweden's west coast.
The agreement was signed by Geely's Chairman Li Shufu, and Ford Chief Financial Officer Lewis Booth, and witnessed by Li Yizhong, the Chinese minister of industry and information technology, as well as Swedish Minister for Enterprise and Energy Maud Olofsson.
The transaction will be made through a US$200 million note, while the remainder will be paid out in cash, Booth said.
The deal also covers further agreements on intellectual property rights, supply, and research and development arrangements between Volvo Cars, Geely and Ford.
In a statement, Geely said it has secured all the financing necessary to complete the deal, as well as "significant working capital facilities to fund Volvo Cars' ongoing business."
Geely said it aims to keep Volvo's existing manufacturing facilities in Sweden and Belgium, but that it will also explore production opportunities in China.
"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," Li said.
Ford has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.
As Western auto makers unload unprofitable assets, they are finding keen buyers in Asia.
In 2008, Ford sold its Jaguar and Land Rover brands to India's Tata Motors Ltd for US$1.7 billion.
General Motors Co tried to sell its rugged Hummer brand to a private Chinese heavy equipment maker, but it is now winding that brand down as the deal collapsed.
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