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Sale of Ford's last European brand rumored to be for $1.8 billion
According to a recent report, Ford’s sale of Volvo to Chinese automaker Geely could go through as early as February 8th. Ford and Geely have already announced they are working out details of a plan with the latest rumor indicating that the sale could be for as little as $1.6 billion, with a $1.8 billion asking price more likely.
Ford purchased Swedish automaker Volvo back in 1999 for a staggering $6.45 billion, as it looked to create a European luxury division – which also included Aston Martin, Land Rover and Jaguar. A new corporate strategy has seen Ford sell off all but Volvo, a move which has been slowed by the recent economic downturn.
By offloading Volvo, Ford looks to loose almost $5 billion in a decade as it pursues a more focused brand strategy. By offloading its European brands Ford was able to steer clear of bankruptcy court, a move than has instilled consumer confidence in the brand and seen its sales surge while other automakers watched their sales decline.
Ford Motor Co. and Zhejiang Geely Holding Group (Geely) have reached a general agreement on the terms of a sale that would see Ford’s loss making Volvo unit sold to the Chinese automaker. An initial agreement is set to be signed in the first quarter of 2010, with the transaction complete in Q2.
Ford said in a statement that the 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 a general agreement has been reached, some details still need to be worked out and Geely is still working to secure funding from the Chinese government. Ford has said that it does not intend to keep a stake in Volvo once the sale is completed.
The sale of Volvo would mean the complete dismantling of Ford’s premium group of automaker, which at once point also included Aston Martin and Jaguar Land Rover. It is thought that the sale of those entities helped Ford avoid filing for bankruptcy protection.
Meanwhile, rival American automaker General Motors has had far less luck in selling off its brands, with sales of both Hummer and Saab pending (but constantly in doubt), while the domestic Saturn brand is now scheduled to be eliminated after a deal to sell it to the Penske Automotive Group fell through.
[Source: Automotive News]
Ford’s sale of its Swedish Volvo brand to Chinese automaker Geely has moved one step closer to completion with news that the two companies have reached an agreement on intellectual property rights issues.
The agreement will see Geely take over control of all technology developed exclusively by Volvo, and still allow Volvo to use any Ford technologies that are vital to developing the brand as a safety leader and in helping it meet increasingly strict environmental regulations.
The step is seen a a huge move forward as it had potential to become a roadblock. Earlier this year the sale of GM’s Opel unit to China’s Beijing Auto was reported to have fallen through due to intellectual property rights issues.
Just last month Ford named Geely as the preferred bidder for Volvo, a deal that is reported to be worth roughly $2 billion, significantly less than the $6.45 billion Ford spent to acquire Volvo in 1999.
Geely has said that its plans for the Volvo brand include doubling the automaker’s production capacity, with huge sales increases projected in Geely’s home market of China. Geely has also said it expects to add several new premium models to the Swedish automaker’s lineup.
[Source: Automotive News]
Huge sales increases targeted for Chinese market
Ford’s preferred Chinese bidder to purchase the automaker’s Swedish Volvo unit has announced a plan that would see Volvo doubt its sales in the coming years. Zhejiang Geely Holding Group, which owns and operated Chinese automaker Geely, has said it believes it could boost total sales to close to one million vehicles globally, up significantly from the roughly 400,000 units it currently sells. Included in that increase would be drastic growth in China, where Geely plans to build a factory capable of producing as many as 300,000 vehicles. Geely’s plan would see Volvo sell as many as 200,000 units in China, up significantly from the 12,600 units it sold last year.
Also included in Geely’s plan would be the introduction of two or three new vehicles, which would be larger, more luxurious and more expensive than much of Volvo’s current offerings.
In the short term, Geely would look at updating Volvo’s Swedish manufacturing facilities.
The reported price for Volvo is $2 billion, but the deal has yet to be settled with some issues (including intellectual property rights) yet to be resolved.
Geely’s plan for Volvo is in many ways the opposite of a reported plan by Koenigsegg for Sweden’s “other” automaker, Saab. That plan would see Saab sell fewer vehicles than it currently does but at much higher prices.
Ford named Chinese automaker Geely Holding Co. as its preferred bidder for Volvo.
“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,” said Ford Chief Financial Officer Lewis Booth in a statement.
FoMoCo announced it will step up negotiations with Geely, though it’s still far too early to say any deal will be complete any time soon. Ford said it will have “detailed and focused” negotiations with Geely, but no final decisions have been made.
Volvo has been on the block since December but it could still be months before any deal is finalized.
Part of the hold-up on any sale is how closely tied Volvo is to Ford’s operations. Ford says it does not intend to hold onto a share of Volvo but is open to continue collaborating with the Swedish brand after any sale.
No financial terms were disclosed, though reports have them pegged closer to $2 billion, much less than the $6.45 billion Ford spent to acquire Volvo in 1999.
[Source: Automotive News]
For several months Chinese automaker Geely has been touted as the front runner in the bid for Volvo, but now a U.S.-based group has emerged with a credible offer.
Calling itself the Crown consortium, the group consists of several private equity firms and is fronted by two industry experts: Michael Dingman, a former Ford director; and Shamel Rushwin who held executive positions at both Ford and Chrysler.
Crown is also seeking additional funding from Swedish investors, which it hopes will help garner favor with the Swedish car maker. It is also seen as a sign of good faith that Crown wants to keep Volvo in its native country.
Crown’s offer is, however, not as significant as Geely’s almost $2 billion bid, but in many ways dealing with the U.S. group would be easier due to the lack of Chinese government involvement. Both companies are reported to have plans that would front an additional $3 billion after their initial purchase price.
Ford is rumored to be preparing to make a choice within the next few weeks, after which it would agree to hammer out the final details of a deal with the preferred party.
[Source: Financial Times]
Ford’s sale of Swedish automaker Volvo to China’s Geely Automotive may start next month.
According to a report in Swedish business daily Dagens Industri, Geely is the only company to actually submit a competitive bid. In July Ford reps commented that the automaker was discussing with several potential buyers.
Ford has reportedly set the a deadline of this year to sell-off its money-losing Volvo unit, which it put up for sale just before the economy turned sour. In order to solidify the deal by then, Ford would need to begin a preliminary sell-off by October.
With the economy turning around, however, and Ford profiting off the struggles of not just GM and Chrysler, but also foreign giants like Toyota, it may not be so eager to take just any bid to part with Volvo.
[Source: Automotive News]
After General Motors made it clear in its viability report submitted to the U.S. Treasury that the future of Saturn was uncertain at best, it appears as though Saturn’s network of dealers has its own plan.
Dan Januska, owner of Saturn of Scottsdale, told the Wall Street Journal that the dealers have been in talks to work with a foreign automaker from either China or India. The deal would see Saturn dealers keep their dealerships and retain the Saturn brand, and sell vehicles badged as Saturns, but made by another manufacturer, possibly Chery, Tata, Geely or Build Your Dreams (BYD).
“There are not a whole lot of alternatives,” said Januska to the Journal, “Someone is going to see the value of us and I don’t know who it will be.”
GM’s CEO Rick Wagoner commented on the possibility of the sale of the Saturn name (something General Motors would certainly like to see happen), stating that, “It’s a good distribution network. If someone comes up with an offer, we’re very open to that.”
As we already reported, General Motors stated in its viability plan that it will continue to produce and deliver vehicles to Saturn dealers until 2012, after which GM has no plans for the brand.
[Source: LeftLaneNews via the Wall Street Journal]