The sale process is expected to be finalized in the third quarter of the current year and will follow customary closing conditions, including receipt of current regulatory approvals. Geely will pay Ford a total of $1.8 billion: the transaction will be initiated through a $200 million note of amount, with the rest of the money to be paid in cash. The latter will suffer adjustments following customary purchase price modifications related to pension deficits, debt, cash and working capital. As a result, Ford is expected to receive a significantly reduced amount of money.
“Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely’s ownership,” said Alan Mulally, Ford’s president and CEO. “At the same time, the sale of Volvo will allow us to further sharpen our focus on building the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world.”
The deal states that Ford will continue to supply certain components to Volvo and will provide technical know-how and other related information until the separation process reaches the 100 percent completion point.
As Volvo vehicles use Ford components, Ford and Geely have developed an intellectual property management plan that will allow both companies to deliver their business plans without risks. The plan includes measures such as the granting of sublicenses for certain Ford intellectual property assets related to Volvo Cars to third party companies, including Geely.
“Zhejiang Geely would like to pay tribute to Ford’s stewardship of the Volvo brand, and we look forward to continued cooperation as Volvo embarks on the next stage of its evolution with Geely,” said Li Shufu, chairman of Zhejiang Geely Holding Group Company Limited.
“The Volvo management team fully endorses Ford’s sale of Volvo Cars to Geely. We believe this is the right outcome for the business, and will provide Volvo Cars with the necessary resources, including the capital investment, to strengthen the business and to continue to move it forward in the future,” added Stephen Odell, CEO of Volvo Cars.
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