Wednesday, December 23, 2009

Ford Agrees Volvo Sale To China Geely Holding

. Wednesday, December 23, 2009

By stockOzone team

Ford has agreed the terms of the sale of its Swedish business, Volvo Cars, to China's Geely.

In a statement Ford said "while some work still remains to be completed...[they] anticipate a definitive sale agreement in the first quarter".

Ford put Volvo up for sale a year ago to help pay off its debt and make its business more focused.

Geely was named preferred bidder in November. If completed, it will be the largest purchase by a Chinese car firm.

Ford said that while the "substantive commercial terms" had been settled, financing still needed to be completed and government approval was also necessary.

It is thought that this update on the sale will help Geely to secure the financial backing it needs.

No details were given of how much the deal is worth, but it is widely rumoured that Geely is paying Ford $2bn (£1.2bn; 1.4bn euros). That is considerably less than the $6.45bn Ford paid in 1999.

Ford said it expects to continue co-operating with Volvo Cars, but did not intend to retain a shareholding in the business after the sale.

Nomura's auto specialist Michael Tyndall said: "In theory, the Chinese market could be an opportunity for Volvo. It's a well-known brand, has a good heritage and a range of products that should appeal to the Chinese consumer."

Disclosure: Author does not own any of the stocks discussed here.

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