- The Washington Times - Sunday, March 28, 2010

STOCKHOLM (AP) — Zhejiang Geely Holding Group signed a binding deal Sunday to buy Ford Motor Co.’s Volvo Cars unit for $1.8 billion, allowing the independent Chinese automaker to expand its foothold in Europe.

The stock purchase agreement is subject to regulatory approvals and is expected to be completed in the third quarter, representatives of two automakers said as they presented the deal at a news conference at Volvo Cars headquarters in Goteborg, on Sweden’s west coast.

The agreement was signed by Geely’s chairman, Li Shufu, and Ford Chief Financial Officer Lewis Booth, and witnessed by Li Yizhong, the Chinese minister of industry and information technology, as well as Swedish Minister for Enterprise and Energy Maud Olofsson.

The transaction will be made through a $200 million note, while the remainder will be paid out in cash, Mr. Booth said.

The deal also covers further agreements on intellectual property rights, supply, and research and development arrangements between Volvo Cars, Geely and Ford.

In a statement, Geely said it has secured all the financing necessary to complete the deal, as well as “significant working capital facilities to fund Volvo Cars’ ongoing business.”

Geely said it aims to keep Volvo’s existing manufacturing facilities in Sweden and Belgium, but that it will also explore manufacturing opportunities in China.

“China, the largest car market in the world, will become Volvo’s second home market. Volvo will be uniquely positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market,” MR. Li said.

Ford has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.

As Western automakers unload unprofitable assets, they are finding keen buyers in Asia.

In 2008, Ford sold its Jaguar and Land Rover brands to India’s Tata Motors Ltd. for $1.7 billion, a third of what it paid for them. In addition, General Motors Co. attempted to sell its rugged Hummer brand to a Chinese heavy equipment maker but is now winding that brand down as the deal collapsed.

China’s Beijing Automotive Industry Holdings also has agreed to buy some powertrain technology from GM’s Swedish Saab unit.

Geely, an independent automaker that has struggled to upgrade its image in overseas markets, long has coveted a bigger foothold in Europe. It earlier was rumored to be bidding for Opel and Saab.

Volvo employs nearly 20,000 workers, with the majority in Sweden.

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