Mar 29th, 2010 by Ross Edwards
Ford has announced that it will sell its Volvo brand to Zhejian Geely, a Chinese car company. The sale will be completed in the third quarter of 2010 and will be for about $1.8 billion. Ford will continue to have a relationship with Volvo after the sale is completed, but will not own any part of the company.
Zhejiang Geely will pay Ford with a note for $200 million and will pay the remainder of the purchase price in cash. The remainder will be adjusted at the time of close to compensate for changes in pension deficits, debt, cash and working capital. The adjustments at the time of the sale may significantly change the amount Geely pays to Ford for Volvo.
Part of the sale agreement is that Ford will provide support in engineering, information technology and tooling for a transitional period. After that, Ford will continue to supply Volvo Cars with powertrains and other vehicle components for some time to ensure that the transition in ownership goes smoothly.
Ford says that the sale of Volvo will allow the company to focus more on the One Ford plan for the business. Ford plans to begin building global cars soon. The plan is to build the same cars for Europe, the Americas and Asia and devote more time and money toward each individual car.
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