Official: Ford completes sale of Volvo to Geely for $1.8 billion

David Walker, LeaseTrader.com — Mon, 02 Aug 2010 17:04:52 GMT

Official: Ford sells Volvo to Geely for $1.8 billion

After months of protracted negotiations, Ford has officially sold Volvo to Zhejiang Geely Holding Group Company Limited – aka Geely – for $1.8 billion.

The Chinese automaker originally included a $200 million note and the balance in cash, and today, it paid the remaining $1.3 billion to wrap up the sale, although the final sale price won't be released until later this year and could put more cash in the pockets of FoMoCo.

Under the terms of the sale, Ford will continue to supply Volvo with everything from powertrains to stamping systems and other vehicle components for differing periods of time. Additionally, Ford and Geely have come to an agreement on intellectual property usage, with Volvo allowed to grant sub-licenses to specific systems to third parties, including Geely.

Stefan Jacoby – formerly of Volkswagen – will take the helm as the new President and Chief Executive of Volvo Cars, and under the new ownership, the automaker will continue to keep it headquarters and manufacturing centers in Sweden and Belgium.

Ford PRESS RELEASE

Ford MOTOR COMPANY COMPLETES SALE OF Volvo TO GEELY

DEARBORN, Mich., Aug. 2, 2010 – Ford Motor Company [NYSE: F] today announced it has
completed the sale of Volvo Car Corporation and related assets to the Zhejiang Geely Holding
Group Company Limited.

The total purchase price for Volvo and related assets set forth in the agreement signed in March 2010
was $1.8 billion, including a $200 million note and the balance in cash, with the cash portion subject
to customary purchase price adjustments at closing. Pursuant to the terms of the agreement, Geely
today issued the note and paid $1.3 billion in cash to complete the sale. The estimated purchase price
adjustments used at closing are expected to be finalized and settled following final true-up of the
purchase price adjustments later this year. The final true-up is expected to result in additional
proceeds to Ford.

“Volvo is an excellent brand with a strong product line, and it has returned to profits after a
successful restructuring. We are confident Volvo has a solid future under Geely’s ownership,” said
Alan Mulally, Ford’s president and CEO. “At the same time, the sale of Volvo will allow us to
sharpen our focus on the Ford brand around the world and continue to deliver on our One Ford
plan serving our customers with the very best cars and trucks in the world.”

Ford will continue to cooperate with Volvo in several areas to ensure a smooth transition, but has
not retained any ownership in the Volvo business. Ford will continue to supply Volvo with, for
differing periods, powertrains, stampings and other vehicle components. Ford also has committed to
provide engineering support, information technology, access to tooling for common components,
and other selected services for a transition period.

Agreements between Ford and Geely govern the use of intellectual property; these agreements will
allow both Volvo and Ford to deliver their business plans and establish the proper use of each
other’s intellectual property.

“The Volvo team has made tremendous progress in restructuring its business and delivering results
during the sale process,” said Lewis Booth, Ford executive vice president and chief financial officer.
“We believe this agreement will provide Volvo with the necessary resources, including the capital
investment, to strengthen the business and to continue to move it forward in the future. We wish
Volvo’s management team, employees and new owners every success for the future.

“Ford appreciates the support of the Volvo management team, Volvo’s labor unions and the
government officials in Sweden and China during this transaction,” Booth added.

As previously announced, Stephen Odell, CEO of Volvo Car Corporation, is returning to Ford as
group vice president and Chairman and CEO of Ford Europe. Stuart Rowley, CFO of Volvo Cars, is
returning to Ford as chief financial officer, Ford Europe.

“Volvo is a proud company with a talented and dedicated team of employees,” Odell said. “I am
especially pleased that with Ford’s continued investment in recent years, Volvo is well positioned
for the future with an exciting range of products that remain true to its core values – safety, quality,
environmental responsibility and modern Scandinavian design.”

# # #

About Ford Motor Company

Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles
across six continents. With about 178,000 employees and about 80 plants worldwide, the company’s automotive brands include
Ford, Lincoln and, until production ends as planned in the fourth quarter of 2010, Mercury. The company provides financial
services through Ford Motor Credit Company. For more information regarding Ford’s products, please visit www.ford.com.

SOURCE: [ AUTOBLOG.COM ]

Volvo under Chinese rule, a new life

David Walker, LeaseTrader.com — Mon, 29 Mar 2010 14:10:04 GMT

Volvo under Chinese rule, a new life

China's Zhejiang Geely Holding Group Co. agreed to buy Volvo cars from Ford Motor Co. on Sunday for $1.8 billion, a landmark agreement designed to vault the Chinese company onto the global automotive stage.

Geely's acquisition of the Swedish brand is the latest example of how China's economic rise is reshaping large swaths of global business, Its huge market and increasingly powerful companies are playing a growing role around the world in industries ranging from cars to natural resources to telecommunications equipment.

The Volvo deal—which comes after China surpassed the U.S. last year as the biggest auto market—puts a Chinese company for the first time in charge of a major global car brand.

"I think Volvo is a tiger," said Geely Chairman Li Shufu, who confirmed that Geely will build Volvos in China. "To liberate the tiger, we need to think on how to uncover the value in Volvo."

The sale marks the latest milestone for Ford Chief Executive Alan Mulally, who has pushed the Dearborn, Mich., company to shed noncore brands in an effort to return Ford to sustainable profitability.

Under the transaction, Ford will receive $1.6 billion in cash and a $200 million note from Geely. Ford, however, will still be obligated to cover some existing Volvo pension plans and debt as well as supply parts to Volvo for years to come.

"We think it's a fair price for a good business," said Ford Chief Financial Officer Lewis Booth said during a press conference at Volvo's headquarters in Gothenburg, Sweden. Ford must use about half its sale proceeds to pay down the $23.5 billion debt the company took on in 2006.

1927 Volvo—Latin for 'I roll'—rolls its first car off an assembly line in Gothenburg, Sweden.

1959 Volvo becomes the first car company to make three-point safety belts standard.

1960 Volvo unveils its first sports car, the P1800

1973 The U.S. becomes Volvo's largest market, ahead of Sweden.

1974 Volvo comes out with a new generation, including the Volvo 240 with six boxy variants.

1980 The first turbocharged Volvo, the 240 Turbo, is shown.

1999 Ford acquires all of Volvo Car Corp. shares for $6.4 billion from AB Volvo.

2002 Volvo introduces its first sport-utility vehicle, the XC90.

January 2008 Geely Chairman Li Shufu expresses formal interest in acquiring Volvo during a meeting with then-Ford Chief Financial Officer Don Leclair after Ford moves to sell noncore brands.

December 2008 Longtime Ford board member John Thornton meets with Mr. Li. Mr. Thornton reports back that the bid should be taken seriously. Later that month, Ford announces it is considering Volvo for sale.

October 2009 Ford chooses Geely as the preferred Volvo bidder.

December 2009 Ford says it has settled all substantive commercial terms for a Volvo sale to Geely. Geely says it has strong Chinese government support for the purchase.

March 28, 2010 Ford announces a deal to sell Volvo to Geely for $1.8 billion.

SOURCE: [ Wall Street Journal ]