Ford has confirmed it has agreed to "all substantive commercial terms" of Volvo's sale to China's Zhejiang Geely Holding Group. The announcement is viewed as a precursor to Geely seeking permission from the Chinese government to go ahead with the deal, something it must receive if the sale is to go through. Sources suggest there is no set time frame for such approval being given, and that it could take anything from days to several months.
Ford paid $6 billion in 1999 to buy Volvo; unconfirmed reports claim that Geely would pay $2bn to buy the brand from Ford.
"While some work still remains to be completed before signing – including final documentation, financing and government approvals – Ford and Geely anticipate that a definitive sales agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter 2010, subject to appropriate regulatory approvals," a Ford Motor Company statement said. "The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core ONE Ford strategy.
"While Ford would continue to cooperate with Volvo Cars in several areas after a possible sale, the company does not intend to retain a shareholding in the business post-sale."
Volvo Cars was founded in the Swedish city of Gothenburg in 1927 and has 22,000 employees worldwide, around 16,000 of whom work in Sweden.
Geely has already moved to assure Volvo's management that it will not radically alter the company's setup. In a statement, Li Shufu, Geely's chairman, said: “Geely is committed to work with all stakeholders to complete the transaction in the best interest of all parties. Volvo will retain its leadership in safety and environmental technologies, and will be uniquely positioned as a world-leading premium brand to exploit opportunities in the fast-growing China market."
Ford announced last December it wanted to sell Volvo. The company picked Geely in October 2009 as preferred bidder.