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Geely to buy Volvo from Ford for $1.8 billion
By LOUISE NORDSTROM, Associated Press Writer55 mins ago

STOCKHOLM – Zhejiang Geely Holding Group signed a binding deal Sunday to
buy Ford Motor Co.'s Volvo Cars unit for $1.8 billion, allowing the
independent Chinese automaker 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 two
automakers said as they presented the deal at a news conference
atVolvo 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 $200 million note, while the
remainder will be paid out in cash, Booth said at the Webcast news
conference.

"We think it's a fair price for a good business, and yes, we're happy with
the deal we've achieved with Geely," he said, adding that his company
believes that, under Geely, "Volvo can continue to build its business and
return to profitability."

The deal also covers further agreements on intellectual property rights,
supply, and research and development arrangements between Volvo Cars, Geely
and Ford.

Li, whose comments were translated by an interpreter, described the deal as
"a milestone" for both Geely and Volvo, adding his group will make a Volvo
CEO public "in due course."

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 manufacturing
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 automakers 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 $1.7 billion, a third of what it paid for them. In addition, General
Motors Co. attempted to sell its rugged Hummer brand to a Chinese heavy
equipment maker, but is now winding that brand down as the deal collapsed.

China's Beijing Automotive Industry Holdings has also agreed to buy some
powertrain technology from GM's Swedish Saab unit.

Geely, an independent automaker that has struggled to upgrade its image in
overseas markets, has long coveted a bigger foothold in Europe. It had
earlier been rumored to be bidding for Opel and Saab.

Volvo employs nearly 20,000 workers, with the majority in Sweden.
--
Eric D. Schwerin
Rosemont Seneca Partners
(202) 333-1880
[email protected]