Ford Motor signed a $1.8bn deal to sell its Volvo brand to Geely on Sunday in a move seen as emblematic of the shift in the global car industry’s centre of gravity from the US and western Europe to China.
The transaction, signed in Sweden, will see Zhejiang Geely Holding Group, the parent of the Chinese carmaker, acquire 100 per cent of Volvo and its assets. Geely said the deal would nearly double its sales to 600,000 in five years, largely by building market share in its home country, Financial Times reports.
The price includes a $200 million note and the remainder to be paid in cash, Ford Chief Financial Officer Lewis Booth said yesterday in Gothenburg, Sweden. Time spent on seeking regulatory approval in different jurisdictions means the companies now aim to complete the deal in the third quarter, Geely Chairman Li Shufu said.
Booming auto sales in China made the nation the largest car market last year, generating profit that’s allowing its manufacturers to reach out to Western markets and technologies.
Divesting Volvo completes Ford Chief Executive Officer Alan Mulally’s strategy of exiting European luxury lines to focus on his company’s namesake brand following the 2007 sale of Aston Martin, and of Jaguar and Land Rover to Tata Motors Ltd. for $2.4 billion the following year, Business Week reported.
"There is no immediate financial impact, but it will help upgrade the branding of Geely cars," said Rebecca Tang, an analyst at CIMB.
Geely Automobile said in a statement on Monday that the parent company will sell all or part of the Volvo business to the listed company if approved by independent non-executive directors of Geely Automobile.
But analysts said the listed company will probably wait at least until Volvo turns around before it will seriously consider buying the asset, Reuters informed.
The Investigative Committee of the Russian Federation put the head of the contractor company of Russia's space corporation Roskosmos, Sergei Slastikhin, on international wanted list
"Washington operators of the sanctions machine ought to get acquainted with the history of Russia, to stop the unnecessary fussing," spokesperson for the Foreign Ministry said