How much of Volvo will remain in Europe?
Ford Motor Company [NYSE: F] and Zhejiang Geely Holding Group Company Limited have agreed on “all substantive commercial terms” regarding the potential sale of Volvo Car Corporation.
The announcement comes as General Motors is in the process of closing bankrupt Saab, the other Swedish car company, unless yet another purchaser comes forth, an extremely unlikely prospect during the ongoing Great Recession.
Sales!
If the legal documentation, financing and government approvals are forthcoming as expected, closing of the sale is likely to occur later in 2010, ensuring some sort of survival — at least in name — for part of the foundering Swedish car business.
Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter, subject to appropriate regulatory approvals.
Ford said in essence that it would continue to love Volvo post sale by cooperating with Volvo Cars, but the Dearborn based company does not intend to retain shares in the business. Ford has a joint-venture in China, now the world’s largest car market, that directly competes with a Geely Volvo operation.
A previous joint venture between Volvo and Renault also failed.
No other details were announced about production locations, job retention and Geely’s future plans. This will make for an uneasy holiday season for Volvo employees and suppliers.
Subsequently Geely released a statement. It said in part, “In recent weeks, Geely has also held constructive meetings with Volvo management, labour representatives and government officials in Sweden and Belgium — where its key manufacturing plants are based. ‘Geely is committed to work with all stakeholders to complete the transaction in the best interest of all parties,’ said Li Shufu, Chairman of ZGH.”