Ford Motor Company has entered into a definitive agreement to sell Volvo Car Corporation and related assets to China’s Zhejiang Geely Holding Group for $1.8bn (£1.2bn).
The transaction includes, in addition to the stock purchase agreement, further agreements on intellectual-property rights, plus supply and research-and-development arrangements between Volvo Cars, Zhejiang Geely Holding Group and Ford Motor Company.
Geely plans to retain Volvo Cars’ manufacturing facilities in Sweden and Belgium and will explore opportunities to manufacture Volvo vehicles in new production facilities to be built in China.
Pending regulatory approvals, the two companies expect the transaction to be completed in the third quarter of this year, when customary purchase price adjustments relating to pension deficits, debt, cash and working capital will be finalised.
‘China, the largest car market in the world, will become Volvo’s second home market,’ said Li Shufu, chairman of Zhejiang Geely Holding Group. ‘Volvo will be uniquely positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market.’
Following the completion of the sale, Ford will continue to supply Volvo Cars with power trains, stampings and other vehicle components over different periods.
As part of the sale, Ford has also committed to provide engineering support, information technology, access to tooling for common components and other selected services to ensure a smooth transition.