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Automobile industry

Ford Sells 100% Stake in Volvo to Geely for $1.8 Billion

Strategic Insights

— 1 min read

Ford Motor Company, a US-based automotive manufacturer, has sold its 100% stake in Volvo Car Corporation and related assets to Zhejiang Geely Holding Group Company Limited (Geely), a China-based manufacturer of cars and motorcycles. The estimated purchase price is $1,800 million, with Geely issuing a $200 million note and paying the remainder in cash. The cash portion will be adjusted at close for customary purchase price adjustments. Ford Motor anticipates that a definitive sale agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter 2010. The sale will enable Geely to expand its business in Europe, while allowing Ford Motor to further sharpen its focus on building the Ford brand around the world.

Key Takeaways:

  • Ford Motor has sold its 100% stake in Volvo Car Corporation and related assets to Geely for $1,800 million.
  • Geely issued a $200 million note and paid the remainder of the purchase price in cash.
  • The cash portion of the purchase price will be adjusted at close for customary purchase price adjustments.
  • Ford Motor anticipates signing a definitive sale agreement by the end of the first quarter 2010.
  • The sale is expected to be completed by the second quarter 2010.
  • Geely will use the acquisition to expand its business in Europe.
  • The sale will enable Ford Motor to focus on building the Ford brand globally.

Statistics:

  • Estimated purchase price: $1,800 million.
  • Note issued by Geely: $200 million.
  • Adjustment for purchase price adjustments: to be finalized and settled later in the year.
  • Sale expected to be completed by: second quarter 2010.
  • Estimated timeline for definitive sale agreement: first quarter 2010.
  • Adjustment range for correct cash proceeds: could be a significant decrease.

Sources:

  • Datamonitor Financial Deals Tracker via COMTEX.
  • Zhejiang Geely Holding Group Company Limited.
  • Ford Motor Company.
  • Volvo Car Corporation.
  • N M Rothschild & Sons Limited.
  • Freshfields Bruckhaus Deringer LLP.
  • Brunswick Group.
  • Citigroup, Inc.
  • Mannheimer Swartling Advokatbyra AB.
  • Hogan & Hartson LLP.

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