Zhejiang Geely Holding Group signed a binding agreement Sunday to buy Ford Motor Co. ‘s Volvo Cars unit for $ 1.8 billion, allowing the independent Chinese automaker to expand its presence in Europe.
The share purchase agreement is subject to regulatory approvals and are expected to be completed in the third quarter, the representatives of the two automakers, he said, and presented the agreement at a press conference at the headquarters of Volvo Cars in Gothenburg, on Sweden’s west coast.
The agreement was signed by the chairman of Geely, Li Shufu and Ford Chief Financial Officer Lewis Booth, in the presence of Li Yizhong, the Chinese minister of industry and information technology, and the Swedish Minister for Enterprise and Energy, Maud Olofsson.
The transaction is done through a $ 200 million, while the balance payable in cash, said Booth.
The agreement also covers agreements on intellectual property rights, supply, and research and development agreements between Volvo Cars, Geely and Ford.
In a statement, Geely said it has secured all the financing necessary to complete the offer, as well as “important facilities to finance working capital of Volvo Cars ongoing business.”
Geely said it aims to maintain the existing manufacturing facilities of Volvo in Sweden and Belgium, but also explore production opportunities in China.
“China, the largest car market in the world, will become Volvo’s second home market. Volvo is in a unique position as a world leading premium brand by taking advantage of opportunities in the rapidly growing Chinese market,” Li said.
Ford has been trying to sell Volvo from late 2008 to concentrate its resources in managing its core Ford, Lincoln and Mercury.
As Western automotive manufacturers download bad assets, which are seeking buyers for Asia.
In 2008, Ford sold its Jaguar and Land Rover to India’s Tata Motors Ltd. for $ 1.7 billion, one third of what you paid for them. Additionally, General Motors Co., tried to sell its Hummer brand a rugged Chinese heavy equipment manufacturer, but now that the liquidation of the mark down as the deal collapsed.
Beijing, China Automotive Industry Holdings also agreed to buy some engine technology of the Swedish Saab unit of GM.
Geely an independent producer who has struggled to improve its image in overseas markets, has always wanted a larger foothold in Europe. He was rumored to be bidding for Opel and Saab.
Volvo employs nearly 20,000 workers, with the majority in Sweden.