In a deal expected to close sometime during the third quarter, Ford Motor Company announced it has entered into definitive agreement to sell Volvo Car Corporation and various related assets and intellectual properties to China's Zhejiang Geely Holding Group Company Limited. This landmark transaction will bring $1.8 billion into Ford's coffers, all of which save for a $200 million note will be paid in cash. That amount is $4.7 billion less than it originally paid to buy the Swedish automaker back in 1999. It will also move Geely into an entirely new and different position on the international automotive stage.
In his statement, Geely Chairman Li Shufu said that his company had secured all necessary financing and intended to continue to use Volvo's existing manufacturing facilities in Sweden and Begium but explore adding new "opportunities" in China as well. Li also indicated that Geely and Volvo Cars will remain separate entities, and that the latter will continue operating under its own Sweden-based management team.
Ford plans to remain involved with Volvo Cars on several levels after the sale has been completed. These will include supplying it with powertrains, stampings and other vehicle components for various periods of time, however it will not retain any kind of direct ownership position. Supplemental agreements between Ford and Geely also will cover various intellectual property rights to prevent any misuse of these assets, as well as to permit Volvo Cars to grant third-party sublicenses to certain related elements belonging to Ford but used by Volvo Cars. That group would include future cars manufacturered by Geely itself.
"Volvo is a great brand with an excellent product lineup. 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. "At the same time, the sale of Volvo will allow us to further sharpen our focus on building 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."
Stephen Odell, CEO of Volvo Cars, added, "The Volvo management team fully endorses Ford's sale of Volvo Cars to Geely. We believe this is the right outcome for the business, and will provide Volvo Cars with the necessary resources, including the capital investment, to strengthen the business and to continue to move it forward in the future.