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Ford Completes Sale of Volvo to Geely

2 August 2010

Ford Motor Company 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.

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.

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.

August 2, 2010 in Brief | Permalink | Comments (2) | TrackBack (0)

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Comments

Killing off the Mercury brand and getting rid of Jaguar, Land Rover and Volvo, and bringing in Mullaly from Boeing, among other things, have been some of the best decisions Ford has made in years. Ford is no longer a generic brand like it was for decades - it's become more upscale...not premium but definitely significantly better than it was.

Ford had to do something, the 500 and Freestyle based on Volvo were not selling. Companies that they bought were not making them much money. They borrowed more than $20 billion in a make or break attempt to save the company. They were half the way through that borrowed money when $4 gasoline and the collapse hit.

It is said that it is better to be lucky than good. I don't know about that, but they took on maximum debt when they had to and circumstances did the rest. They said that they did not need government money at the time, but they might need it in the future. They are on a more firm footing now and I wish them well.

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