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.’s 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. Continued after the jump!

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For a successful overhaul, Geely will require at least $1.4 billion once the deal to buy Volvo from Ford is finalized, according to Volvo’s board members and union officials.

The Chinese carmaker is believed to already have secured financing for the deal but it is likely that it would need another $1.4 billion to finance car development, production, marketing, and distribution. In an interview with Bloomberg, Glenn Magnusson, head of the managers’ union at Volvo, said that this number is “an absolute minimum.” Continued after the jump!

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With Geely now having been able to secure 15 billion Swedish crowns, it appears that it will be successful at finalizing its purchase of Volvo from Ford, according to Swedish business daily Dagens Industri.

Chinese manufacturer Geely needs this much money to complete the deal from Chinese financial institutions and regional government bodies. A source said that the amount is already in the bank account of Geely’s parent company Zhejiang Geely Holding Group. So far, Geely has not made an official statement. Geely stated earlier this week that a deal is pending and that financing remains out of reach. It is reported that Geely has a target by May to complete the deal for Volvo.

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Zhejiang Geely Holding Group is doing what it can to conclude the acquisition of Ford Motor Co.’s Volvo unit in early 2010, according to Reuters who declined to name its sources.

In fact, Geely has hired consultants for restructuring and integration. Roland Berger Strategy Consultants, which is based in Germany, is reportedly tasked to launch a 100-day internal review and restructuring to improve Geely operations with a focus on sales of Geely’s self-branded cars in China. Another source is in agreement and tells Reuters that there are “no more hurdles” to the Volvo deal, which is expected to be completed before Chinese New Year (February 14). As soon as the deal is done, Geely will launch integration. Geely has yet to comment on this report.

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At least three major Chinese banks have Geely’s back as it pursues its bid for Ford Motor Co.’s Volvo unit. Geely has already been named the preferred bidder but for the agreement to proceed, Ford had asked about Geely’s financing plans.

Sources say that banking sources are the least of Geely’s problems as so far, Bank of China, China Construction Bank and Export-Import Bank of China had agreed to extend loans to Zhejiang Geely Holding Group. Export-Import Bank of China is a policy lender wholly owned by the Chinese government and directly led by the cabinet. Continued after the jump!

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Zhejiang Geely Holding Group, the parent of Geely Automobile, will face tough competition from a US consortium called Crown, which is set to make a bid for Volvo next week, the Dagens Industri daily reports. Crown represents a group of Swedish investors led by Michael Dingman, a former Ford Motor Co. director. Last December, Ford had put its Volvo unit up for sale.

Last month, Ford named Geely to be its preferred bidder. Media reports put Crown’s bid at between $2 billion and $2.5 billion. A Crown consortium source has said that there’s no point in bidding low since nothing will be won that way. Dingman served on Ford’s board from 1981 to 2002 before he retired.

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Instead of looking to acquire other car manufacturers such as Volvo, Magna International said that it’s more likely it would be looking to take over other auto parts businesses. Magna’s intention to complete a deal for Opel/Vauxhall collapsed after parent company General Motors chose to keep the unit.

Don Walker, Magna’s co-chief executive officer, said that the focus would be turned towards the parts business. At the Chrysler-Fiat press conference, Walker said that he was neither surprised nor disappointed with GM’s decision. He lamented the fact though that a large amount of time and money was wasted.

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The chairman of Zhejiang Geely Holding, Li Shufu, said that the company was confident about winning the bid for Ford Motor Co.’s Volvo car unit, Reuters reports. Zhejiang Geely Holding, the parent of Geely Automobile, leads a consortium that includes both domestic and foreign banks.

When this deal does go through, which has every indication of happening, will mark China ’s biggest acquisition of foreign auto assets. At the sidelines of a business event in Shanghai , Li had spoken with Reuters and he said that the talks were still at an early stage and were proceeding at a cautious pace. Lin said that the parties are taking their time in deciding on the details. Last Wednesday, Ford named Zhejiang Geely Holding as its preferred bidder. With the Volvo acquisition, Li said that it would then be able to promote Geely’s strategic development as it moves beyond Chinese market and onto the global stage.

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Analysts say that if Geely Automobile’s parent, Zhejiang Geely Holding, succeeds in its bid to acquire the Volvo Unit from Ford Motor Co., then it would gain a valuable brand but it could take years before profits are seen.

The shares of Geely Automotive have soared ever since news of the bid was announced. Geely, which means “lucky” in Chinese, would benefit much from modern and innovative technologies that can upgrade its cars to tap the rising affluent auto market in China. Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management, said that the market remains divided on the Geely deal. There are some who believe that if Geely won’t be able to manage Volvo well, then there would be dire consequences. Geely, which had a reputation of making the cheapest cars in China, would benefit from the purchase through the availability of new technology and better brand recognition. The broader market has slipped but Geely’s stock has risen fourfold this year, the highest point being reached last Thursday. This increase can be attributed to Ford’s announcement last Wednesday that Zhejiang Geely Holding Group is its preferred bidder for Volvo.

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Due to conflicts over intellectual property rights, Geely Holding’s attempt to buy Ford Motor Co.’s Volvo car unit is in danger of stalling, according to an unnamed source. Since the early part of 2009, there have been talks participated in by representatives from Ford and Geely, parent of Hong Kong-listed car maker Geely Automotive, with regards to the sale, said to be around $2 billion.

The latest talks in London are believed to be focused on the U.S. carmaker’s concerns about sharing its proprietary technology and plans for new products. This point is a critical one since an impasse on that issue could scupper the negotiations. A Ford spokesman said that it has been consistently stating that this process will take some time to unfold. Last September, Geely said that it was considering a bid for Volvo along with a local government-backed investment firm.

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