U.S. automaker Ford has confirmed that it expects the sale of its Swedish-based subsidiary Volvo, to Zhejiang Geely Holding Group Company Limited, China's second largest private automaker, to be completed in the second quarter of 2010.
Volvo's car division, officially founded in April 1927 in Hisingen, near the city of Gothenburg in the Southwest of Sweden, was sold to Michigan-based Ford in 1999 in a deal worth $6.45 billion.
But, as the London Times reports, Ford, the only one of the "Big Three" automakers in the U.S. not to require a government bailout or bankruptcy protection, faced with the losses being made by Volvo, announced earlier in the year that it was looking to dispose of its Swedish subsidiary.
Reportedly three Chinese automakers expressed an interest in Volvo, Zhejiang Geely first registering an interest in September.
Other potential buyers included a consortium headed up by a former director of Ford, Michael Dingman.
A statement on the Ford website refers to "all substantive commercial terms relating to the potential sale of Volvo Car Corporation" having been settled and then the statement goes on to say:While some work still remains to be completed before signing – including final documentation, financing and government approvals – Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter 2010, subject to appropriate regulatory approvals.
The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core ONE Ford strategy.
While Ford would continue to cooperate with Volvo Cars in several areas after a possible sale, the company does not intend to retain a shareholding in the business post-sale
No mention is made in the statement of the price being paid for Volvo by Zhejiang Geely but the London Times believes the figure to be just under $2 billion, stating also that Ford was looking to achieve a sale price between $1.5 billion and $2 billion.
In addition to maintaining Volvo's current manufacturing facilities Zhejiang Geely may open a plant in China itself.