THE SALE OF VOLVO has reached a critical stage, with current owner Ford announcing that it has agreed to "all substantive terms" of Geely's offer to buy the Swedish automaker.
The amount Geely is proposing to pay for Volvo isn't known, but current estimates put that figure around the US$2 billion mark. Ford paid roughly US$6 billion for Volvo when it purchased the company in 1999.
Ford said in a statement that it, "does not intend to retain a shareholding in the business post-sale", however it and Volvo would continue to co-operate in the future. As part of the deal, Geely will also own the intellectual property rights to all current and future Volvo technology.
The sale is expected to be concluded in the second quarter of 2010, once financing has been secured and approval given by the Chinese and Swedish governments.
Ford says it selected Geely as its preferred buyer for the Volvo brand because of its extensive resources and its assurance that it would not radically alter the brand.
"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand,â€ Ford Chief Financial Officer Lewis Booth said.
Ford said in a statement issued this week that the sale of Volvo would benefit the American automaker by enabling it to focus on the recovery of its core brand.
"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."