Ford has been sold to the Zhejiang Geely Holding Group in a $1,8 billion (around R13,3 billion) deal that grants outright ownership of the Swedish marque to China’s tenth largest automaker.
The deal will not see Ford retaining any shareholding in the Volvo brand, but the company will continue to supply Volvo with powertrains, dies and other components for an, as yet, undisclosed period. Ford will also provide engineering support and access to common components during the transitional phase of the handover.
Part of the agreement between Ford and Geely includes a set of protocols that govern the use of intellectual property, allowing Volvo to sublicense portions of Ford’s Volvo-based intellectual property to third party entities, including Geely.
“Volvo is a great brand with an excellent product line-up. 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 in a statement.
“At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world.”
According to reports, the $1,8 billion price is still subject to some change pending a final investigation into Volvo’s financial standings at the time of completion. Because of this audit, which takes into account such loose ends as pension obligations, the deal will only be officially signed off around the third quarter of 2010. Even so, it is expected that all of the sale price, bar a sum of $200 million, will be paid in cash sourced from a number of governments and private organisations (including banks in China, the USA, Sweden and Belgium).
Geely Chairman Li Shufu said: “We are pleased to have reached this agreement with Ford, enabling us to safeguard and strengthen Volvo’s renowned brand heritage. This transaction will ensure Volvo’s continued leadership in the premium segment, where it enjoys a global reputation for safety and environmental-friendly technologies.
“This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design. As part of the proposed transaction, Zhejiang Geely Holdings will maintain the strong collaborative relationships that Volvo has built with employees, unions, suppliers, dealers and above all, customers.
“On completion, Volvo Cars will be a separate company with its own management team based in Gothenburg, Sweden, and a new board of directors.”
Geely also confirmed Stephen Odell, Volvo’s CEO, will remain in his current position and in the long-run manufacture will remain in Sweden. There has been talk of Volvo expanding into China, but its proximity of supply-chain infrastructure means such a move is still some way off.
According to Shufu, the movement of Volvo to “the largest car market in the world [China]” could see the previously ailing marquee bump its annual sales figures up to 200 000 cars a year in the Chinese market alone.