• Aug 2nd 2010 at 7:46AM
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2011 Volvo S60 – Click above for high-res image gallery

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.

Full details in the dueling press releases after the jump.

[Source: Ford, Geely]
Show full PR text

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 offer. "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."

Geely Holding Group Completes Acquisition of Volvo Car Corporation

Stefan Jacoby Named President and Chief Executive of Volvo Cars; New Board Unveiled

HANGZHOU, China and GOTHENBURG, Sweden, Aug. 2 -- Zhejiang Geely Holding Group Co., Ltd. ("Geely Holding Group"), one of the fastest-growing car manufacturers in China, today announced it has completed the acquisition of 100 per cent of Volvo Car Corporation ("Volvo Cars") from Ford Motor Company.
Geely also announced that Stefan Jacoby, the Chief Executive of Volkswagen Group of America, would become President and Chief Executive Officer of Volvo Cars.

Li Shufu said: "This is a historic day for Geely, which is extremely proud to have acquired Volvo Cars. This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design as it strengthens the existing European and North American markets and expands its presence in China and other emerging markets."

Stefan Jacoby, the new President and Chief Executive of Volvo Cars, said: "I am honoured to join a company with the prestige and growth potential of Volvo. Our employees, suppliers, dealers -- and above all our customers -- can be confident that Volvo will preserve its special status as the industry leader in vehicle safety and innovation -- even as it pursues new market opportunities."

Following completion of the transaction, Mr. Stefan Jacoby will join the board of Volvo Cars, chaired by Li Shufu, Chairman of Geely Holding Group. The board will comprise several new directors including Hans-Olov Olsson, a former President and Chief Executive of Volvo Cars and a former Chief Marketing Officer of Ford, who will become Vice-Chairman of the board.

As announced on the signing of the stock purchase agreement on 28th March, 2010 Geely has agreed to pay USD 1.8 billion for Volvo Cars, which included a USD 200 million note with the balance paid in cash.

Geely issued the note and paid USD 1.3 billion in cash for Volvo Cars, utilising financing from Chinese institutions and its own balance sheet as well as international capital market resources. The closing consideration reflects adjustments in areas such as pension obligations and working capital.

Under the new ownership, Volvo Cars will retain its headquarters and manufacturing presence in Sweden and Belgium; and its management will have the autonomy to execute on its business plan under the strategic direction of the board.

As part of the transaction, Volvo and Ford will maintain close component and supply relationships, ensuring continuity in areas where they provide supply to each other.

Completion of the acquisition, which follows more than a year of talks between Geely and Ford, was marked at a signing ceremony in London attended by Li Shufu and Lewis Booth, Chief Financial Officer at Ford.

Mr. Li thanked Ford and the Volvo Cars management for their support during the transaction negotiations, and also paid tribute to union and government officials with whom Geely built close contacts.

"The signing and completion of this acquisition reflects the commitment of Ford and Volvo executives to the future of this company, along with the vital input of labour representatives and government officials in Sweden, Belgium and China as well as other relevant countries," said Mr. Li.

The Geely Chairman added that Mr. Stefan Jacoby will succeed Stephen Odell as Volvo Cars' President and Chief Executive, taking up his role on 16th August, 2010.

Hans-Oskarsson, deputy Chief Financial Officer, will become acting CFO of Volvo Cars, replacing Stuart Rowley. Mr. Odell and Mr Rowley are moving to leadership roles at Ford of Europe.

Along with the new management team at Volvo Cars, Geely today named the full board of directors for the Swedish carmaker, comprising:

Li Shufu (Chairman)
Hans-Olov Olsson (Vice-Chairman)
Freeman H. Shen
Hakan Samuelsson
Dr. Herbert Demel
Lone Fonss Schroder
Winnie Kin Wah Fok

The board -- which will include three labour representatives nominated by unions at Volvo Cars -- will assume its duties on completion of the transaction.

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    • 1 Second Ago
      • 5 Years Ago
      Sad, I really liked Volvo.
      Juli Shivani
      • 4 Years Ago
      Nice look and model... http://bit.ly/mfChD8
      • 5 Years Ago
      Last time I buy a Volvo! I love my S60. It will have to last now...
      • 5 Years Ago
      1.8billion ehh? So, then, the UAW here could have bought GM for about $10billion out the door? or Chrysler for $4billlion thereabouts?

      Seems like car companies are prettttty cheap on the free market.
      • 5 Years Ago
      I used to be a huge Volvo fan when I was a kid. One day my obsession just stopped, so I don't have any particular feelings for Volvo. The only real bummer I feel about this deal, is that Sweden loses engineering know-how when Volvo move the R&D abroad. Björn Sällström, staff director at Volvo PV already "warned" that R&D could be moved to China because of a shortage of engineers here in Sweden. Which is just another way of saying that R&D WILL be moved to China, but most likely for other reasons.

      I'm hoping the knowledge will somehow move over to Koenigsegg. But after the bid on SAAB, I'm seriously doubting Koenigsegg could even support themselves in a few years.
      • 5 Years Ago
      The fools at Ford actually believe that the Chinese will honor intellectual property and supplier agreements. Hahahahahahahaha!
        • 5 Years Ago
        Right? Laughable. And how long do you REALLY think this is going to last:

        "and under the new ownership, the automaker will continue to keep it headquarters and manufacturing centers in Sweden and Belgium."

        A year? I bet things'll start shifting before you know it, and the Chinese content on the vehicles in gonna start gradually but assuredly going up.

        Who's ready for toxic interiors?!
        • 5 Years Ago
        Stop being drama queens, guys. Nothing is going to change for the end user.
        • 5 Years Ago
        A cultural thing with the continental Chinese but now Taiwanese? Well that's just idiotic and ignorant (maybe even a bit racist?) considering most "Taiwanese" migrated there from the mainland some 50 or so years ago.

        A lot of you also seem to forget that America is just a little over 200 years old and that other european countries rise to prominence have been fairly brief and owe much to the technological pilfering done to China, which was the height of technology, culture, and innovation for the better part of the past 2,000 years.
        • 5 Years Ago
        hmm. it's more likely that geely wants those parts for some time to keep the production running - being most likely unable to suddenly come up with the parts for volvo themselfs, thus the need for transition perioid. and knowing that geely would clone the parts in due time anyways, it was smart to include it into this contract. for ford volvo was more of a customer to gouge it seems than a real part of the company.

        now it could be good for volvo to not have to source parts design from outside, their own parts were quite nicely designed, even if the cars that they went to weren't nice to drive or look at(talking about 740, big nice diesel with a turbo and finnish winter is skid hell, seriously, it's a good idea to keep your summer tires in the trunk as weight, but it just keeps going and going) . and geely needs design expertise - especially safety.
        • 5 Years Ago
        Except for an occasional show of destroying some street merchant's bootleg recordings, the Chinese government has shown little interest in stopping outright theft of others' intellectual property, and supports institutionalized espionage to steal as much as they can. This is way past the copying and adaptation done by those you mention.
        There is no way for an outsider to set up a business without a government supervised majority partner, who, in most cases will let cost overcome quality unless sat on 24/7, and will lie about child labor and hours, and actual costs and outsources. This is essentially current Chinese custom and practice.
        The actual workers are treated as virtual slaves, with no rights of appeal of layoffs. They're just numbers. Now, many are returning to their untended farms to starve.
        So much for the 1.2 billion.
        • 5 Years Ago
        mr. ed is right. The Chinese place no value on honesty and ethics. Our "free marketers" are delusional to think we get fair trade with China, but protect them to protect WalMarts fat profits.
        • 5 Years Ago
        I like how you assume that 1.2 billion people are all the same and all want to steal things from foreign countries. Face it, modernising means imitating foreign technology before im proving it. Japan did it during the Meiji Restoration, South Korea did it in the 70s and 80s with textiles, and China is doing it now. Yes, China has massive corruption problems, but thats mostly due to their inefficient government. No, that does not mean that Chinese PEOPLE are bad or have worse morals than other Asians.
        • 5 Years Ago
        Using two-wrongs-make-a-right will lose your argument every time. See you in divorce court.
        My comments are about the continental Chinese, not so much for Taiwanese, even less so for our imports, with whom I do business. It's a cultural thing, period.
        • 5 Years Ago
        I saw some losers who cannot see this world from an independent angle
        • 5 Years Ago
        I don't understand.
        The Chinese paid a lot of money for Volvo, and I expect that they got all the intellectual property of the Swedish company.
        I don't think they bought it just for the sake of slapping Volvo labels on all their cars.
      • 5 Years Ago
      Volvo was a drain on Ford...yes, the D3 chassis was pulled from their portfolio (Volvo P2) and it is an excellent chassis design, but it cannot live forever. Ford made the right move in getting out of Volvo.... like Jaguar, Land Rover, and Aston Martin before it. All those different companies were a cash drain on FoMoCo. As long as Mr Mulally can keep the innovations coming and keep the "One Ford" team energized, it doesn't matter if Ford sold Volvo to the martians.....
        • 5 Years Ago
        Now if Ford could only detox from its expensive Swedish fling and replace the D3 with something that will TAKE A PROPER, LONGITUDINALLY-MOUNTED V8! (i.e. Coyote-powered sedan)

        The Volvo-based D3 managed to kill most of Ford's large car business (Remember the orthopedic-shoe-on-wheels Five Hundred?) and will eventually destroy Ford's cop car dominance. And it's the basis for possibly the wimpiest SUV/CUV ever . . . the newly-defanged 2011 Explorer.

        Ford's Volvo misadventure ended up in diverting resources from development of real Fords. The PAG plan caused a decade of neglect at the L-M Division. in the end, it cost the company billions. Volvo's drain wasn't trivial, starting with the $6.45bn that Ford shelled out for Volvo in 1999.

        At least Volvo's safety image distracted some folks from the Firestone/Explorer mess.

        I'm dancing in the street that Ford's "Swedish Affair" may finally be over.
      • 5 Years Ago
      Congratulations to Geely and to the Chinese for purchasing one of the iconic symbols of Western brand marketing. I've lived long enough to witness China transform from Mao to buying Volvo, and I'm not that old. Unbelievable!
      • 5 Years Ago
      Oh....and in related news, the new Volvo S60 will now be called "Leaping Stag Panda Chrome CXVR +"
      • 5 Years Ago
      Interesting article but when are western companies going to realize, you cannot trust the Chinese government not to steal intellectual property, thats what they do everyday.
      • 5 Years Ago
      Oh Happy Day!!! :)
      • 5 Years Ago
      I think the question is. Did Ford make any money from Volvo or not. If not, then they did the right thing. Did they pull a Daimler on Volvo's Chrysler?
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