You’ve probably already heard about Ford’s decision to sell the Volvo Car Corporation and its related assets to Zhejiang Geely Holding Group Company Limited – and now we can bring you the details of the deal.
The sale is expected to close in the third quarter of this year with the purchase price of Volvo Cars set at $1.8billion. This will be paid with a note for $200million and the rest in cash. The cash portion is expected to be adjusted at the close relating to pension deficits, debts, working capital and so on.
Ford will continue to play a role with Volvo in several areas after the sale has been completed to help ensure a smooth transition. However, it will not retain any ownership.
Once the sale is complete Ford will continue to supply Volvo with powertrains, stampings and other vehicle components; and as a condition of the sale it has also committed to providing engineering support along with information technology and other selected services.
Both Ford and Geely have reached an agreement to govern the use of intellectual property and these agreements will also allow Volvo Cars to grant sub-licences to certain portions of Ford’s intellectual property.
According to Li Shufu, the chairman of Zhejiang Geely Holding Group Company Limited, Volvo will be run by Volvo management and will have strategic independence. The company is determined to preserve its distinct identity while maintaining the existing footprint and sales network.
Optimistically, Stephen Odell, the CEO of Volvo Cars, noted that while Volvo is currently selling more than 30,000 units a year in the Chinese market that could be as large as 17million a year.
