Ford Acquires Volvo Car Operations for $6.45 Billion

Strategic Insights -

Ford Motor Co. has announced an agreement to acquire the car operations of AB Volvo for $6.45 billion, outbidding several other major automakers. The deal, subject to regulatory and shareholder approval, marks the auto industry's second giant merger in the past year. Ford's President and CEO, Jacques Nasser, believes the acquisition will strengthen the company's image and generate increased revenue and profitability. Volvo, known for its commercial truck and marine businesses, has been searching for a buyer or partner to focus on its lucrative truck division.

Key Takeaways:

  • The acquisition price is $6.45 billion, outbidding Fiat SpA, Volkswagen AG, and General Motors Corp.
  • Volvo will maintain its commercial truck, marine, and industrial businesses, while Ford will control all Volvo Cars facilities worldwide.
  • The deal is subject to regulatory and shareholder approval and would be the second giant merger in the auto industry since DaimlerChrysler AG was formed last year.
  • Volvo reported a 3 percent increase in global car sales last year, to 399,700 units, with sales trends being "very positive" in Europe and North America.
  • Volvo's sales fell 18 percent in Japan last year and declined in Southeast Asia due to the weak Asian economy.
  • Ward's Automotive Reports suggests the acquisition would help Ford in Europe, where Volvo has a 1.6 percent market share, complementing Ford's 10.1 percent market share.
  • Ford has $13 billion in uncommitted cash and would control Volvo's eight sedans, station wagons, sports coupes, and convertibles.
  • The deal would strengthen Ford's image and generate increased revenue and profitability, according to Ford's President and CEO, Jacques Nasser.

Statistics:

  • The acquisition price is $6.45 billion.
  • Volvo's global car sales last year are 399,700 units, representing a 3 percent increase from the previous year.
  • Volvo's sales in Japan fell 18 percent last year.
  • Ford's market share in Europe is 10.1 percent, while Volvo's market share is 1.6 percent.
  • Ford has $13 billion in uncommitted cash.
  • Volvo has eight sedans, station wagons, sports coupes, and convertibles.

Sources:

  • UPI: "Ford Bids $6.45 billion to Buy Volvo's Car Division" by UNSPECIFIED, January 28.
  • COMTEX: "News Provided by COMTEX (http://www.comtexnews.com)".