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At press conference in Gothenburg, Sweden today, Ford executive vice president Lewis Booth and Geely chairman Li Shufu announced that the companies have reached a final deal to sell Volvo to the Chinese automaker. The final purchase price is $1.8 billion, which includes some of Volvo's intellectual property and its other physical assets.

Volvo will be 100-percent owned by Geely, and Ford will not retain any equity stake. Because of the component sharing between existing Volvo vehicles and Ford models, Ford has agreed to continue supplying powertrains, stampings and other systems to Volvo for an undisclosed transition period. Perhaps the most difficult aspect of this deal is the intellectual property situation. Volvo will be granted licenses to use some Ford-owned technology and will have the ability to sub-license some technology to third parties, including Geely.

Li committed to keeping the Volvo brand separate from Geely while expanding its global reach, particularly in China. Li also stated that Volvo would maintain a manufacturing footprint in Sweden.

The sale is expected to close in the third quarter of this year, pending regulatory approvals. Unlike the aborted sale of Hummer, the Chinese government will likely approve this deal since Geely is already in the car business. The official press release is included after the jump.

[Source: Ford]
Show full PR text

DEARBORN, Mich., 28, 2010 – Ford Motor Company [NYSE: F] today announced it has entered into a definitive agreement to sell Volvo Car Corporation and related assets to Zhejiang Geely Holding Group Company Limited.
The sale is expected to close in the third quarter of 2010, and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The purchase price for Volvo Cars and related assets (primarily intellectual property) is $1.8 billion (U.S.), which will be paid in the form of a note in the amount of $200 million (U.S.), and the remainder in cash. The cash portion of the purchase price will be adjusted at close for customary purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect of which could be a significant decrease in the cash proceeds to Ford.

"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."

Ford will continue to cooperate with Volvo Cars in several areas after the sale has been completed in order to ensure a smooth transition, but will not retain any ownership in the Volvo Cars business.

Following completion of the sale, Ford will continue to supply Volvo Cars with, for differing periods, powertrains, stampings and other vehicle components.

As part of the sale, Ford also has committed to provide engineering support, information technology, access to tooling for common components, and other selected services for a transition period to ensure a smooth separation process.

Ford and Geely have established agreements to govern the use of intellectual property; these agreements will allow both Volvo and Ford to deliver their business plans and provide appropriate safeguards against misuse. These agreements also will allow Volvo Cars to grant sublicenses to certain portions of Ford's intellectual property used by Volvo Cars to third parties, including Geely.

"The Volvo team has done an exceptional job of restructuring its business and remaining focused on delivering its plan during the sale process," said Lewis Booth, Ford's chief financial officer. "With Ford's continued investment in Volvo, it has launched its best-ever product range and remained true to its core values – safety, quality, environmental responsibility and modern Scandinavian design.

"We look forward to continuing to work with Volvo Cars, and wish the management team, employees and new owners every success for the future."

"Zhejiang Geely would like to pay tribute to Ford's stewardship of the Volvo brand, and we look forward to continued cooperation as Volvo embarks on the next stage of its evolution with Geely," said Li Shufu, chairman of Zhejiang Geely Holding Group Company Limited.

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.

"Geely has been very supportive of Volvo Cars' business plans and management team. We look forward to building a strong relationship between Volvo Cars and Geely, and to maintaining a strong relationship with Ford in those areas where we will continue to work together to ensure a smooth transition."

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    • 1 Second Ago
      • 5 Years Ago
      Bob Smith
      • 1 Year Ago
      "Maintain a manufacturing footprint in sweden" Footprint: the impression or image left behind Sneaky wording by the chinese owners.
      • 5 Years Ago
      Geely was once the worst vehicle maker in china, now it got the most safe vehicles brand, so funny.
      • 5 Years Ago
      Ford why would you keep Mercury and sell Volvo!?!?!
        • 5 Years Ago
        Because Mercury costs very little to Ford in terms of R&D (they are mostly slightly more upscale Ford rebadges) and is probably profitable. Volvo is exactly the opposite. Btw, Mercury and Volvo have similar sales numbers in the US.
        • 5 Years Ago
        'Cuz its American, and Volvo is not.
        • 5 Years Ago
        Good point but I can't help but thing that Mercury and Ford would be going after the same customers for most of their models, though, if the cost to make Mercurys is so low it might not matter
      • 5 Years Ago
      So Ford no longer has any foreign brands left. Just a few years back it had a huge collection including Jaguar,Aston,Mazda etc. Now they are back to three American brands. What a downsizing.
      • 5 Years Ago
      Big Mistake.
      • 5 Years Ago
      People in this blog are so funny. Based on knowing nothing about this Chinese auto maker. To comment on how bad it is to Volvo and how bad the whole Chinese are

      people get a life

      I really getting tired of the whole car thing ( thank you autoblog)
      • 5 Years Ago
      Volvo stopped being on my list of new cars to purchase ever since they stopped using Volvonium and went to using regular steel.

      The C30 is pretty nice, though.
        • 5 Years Ago
        LOL. I must admit, the last Volvo I looked at was the 780. Built like tanks with real Volvonium.
      • 5 Years Ago
      oh god.. Have to see what happens I guess.
      • 5 Years Ago
      shame on ford

      - owner of 2007 S60 D5
      • 5 Years Ago
      Selling the Chinese short is perilous. They are capable. It reminds me of the shortsighted opinions we had post WW2 about Japanese products, and look at what the Koreans have done!
        • 5 Years Ago
        @ harlanx6

        > It reminds me of the shortsighted opinions we had post WW2 about Japanese products, and look at what the Koreans have done!

        Japanese and Korean are so unlike Chinese.
      • 5 Years Ago
      With Ford selling Volvo, I guess they hope to revive Mercury's image with fresh product.
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