China's Zhejiang Geely Holding Group has bought Volvo cars from Ford Motor Company for $US1.8 billion in a move that for the first time puts a Chinese company in charge of a major global car brand.The deal comes after China surpassed the US last year as t
China's Zhejiang Geely Holding Group has bought Volvo cars from Ford Motor Company for $US1.8 billion in a move that for the first time puts a Chinese company in charge of a major global car brand.
The deal comes after China surpassed the US last year as the biggest car market and puts a Chinese company. Under the terms, Ford will get $US1.6 billion in cash and a $US200 million bond from Geely.
Ford, however, will still be obligated to cover some preexisting pension plans and other debt, according to Ford chief financial officer Lewis Booth. The companies didn't detail the timeline for the transition period.
"We think it's a fair price for a good business," Mr Booth said at a press conference at Volvo's headquarters in Gothenburg, Sweden.
Ford paid $US6.4 billion for Volvo in 1999 during an acquisition spree. It has since sold its Jaguar Land Rover and Aston Martin operations and a shareholding in Mazda as well to concentrate on its core brands.
Ford must use about half of the Volva sale proceeds to help pay down the $US23.5 billion in debt the company secured in 2006, but Mr Booth said it was still unclear what the total proceeds of the sale would be until the transfer is complete.
"I think Volvo is a Tiger," said Li Shufu, chairman of Geely, who confirmed that Geely would build a Volvo plant in China. "To liberate the tiger we need to think on how to uncover the value in Volvo."
Mr Li said at a the press conference he didn't plan to merge Volvo and Geely. Instead, Volvo would remain as an independent brand and retain its current management team for the time being.
The first low-priced Geely models have started appearing in New Zealand showrooms while Volvo has long been identified as a premium brand.
