Geely and Ford still on track to sign a deal this month for Volvo
By Andrew C., 26 Aug, 2010. 0 Comments
2011 Volvo S80
Earlier this month, a Chinese newspaper had reported that a deal for Zhejiang Geely Holding, China's largest privately owned carmaker, to buy Ford Motor Co. Volvo cars unit is unclear. To dispel this rumor, spokesmen for Ford and Geely have confirmed that these two companies remain on track to sign the $2 billion deal this month. The spokesmen said that the firms will sign a sale and purchase agreement (SPA) by the end of this quarter, and that the deal is expected to be completed in the second quarter. The two parties are making progress "according to plan" on the three key issues of legal documentation, financing, and regulatory and governmental approvals, according to Anders Fogel, a Stockholm-based spokesman for Geely. The report that caused a stir came from China Daily, which cited sources familiar with the matter. These sources supposedly said that the deal is faced with "unsolved obstacles and uncertainties" and that the two companies have not yet reached a definitive agreement. The report also said that Geely had to resolve both financing and technology issues. China Daily added that after the deal, Geely has to spend at least $1.4 billion to finance car development and marketing. Whether Geely would be able to secure the necessary funds remains a serious issue. Zhejiang Geely is the parent of Hong Kong-listed Geely Automobile. The Chinese automaker seeks to complete the purchase of Ford's Volvo unit for up to $2 billion by May, according to a Reuters report. [via autonews - sub. required]
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