China's Ministry of Commerce has given its approval of Zhejiang Geely Holding Group Co.'s purchase of Ford Motor Co.'s Volvo car unit. This allows the $1.8 billion acquisition, which was agreed by the two companies in March, to proceed for completion. A ministry spokesman recently confirmed its approval of the deal.
On March 28, Geely agreed to purchase the Volvo car business from Ford -- the biggest overseas acquisition by a Chinese automaker. Before selling off Volvo, Ford CEO Alan Mulally had divested Aston Martin, Land Rover and Jaguar.
Geely Automobile Holdings Ltd., Geely's Hong Kong traded unit, increased by 11.3%, the largest jump in five months, last Thursday to close at HK$2.95 ($0.38). The stock has fallen 31% this year, compared with the benchmark Hang Seng Index's 3.6% decline. Sources say that Ford aims to complete its sale of Volvo to Geely next week, pending final regulatory approvals and financing.
Ford has said that it will still supply Volvo with engines, transmissions and other vehicle components. Ford also agreed, for an unspecified period, to give engineering and technology support and access to tooling for common components.
Throughout the world, Volvo Car Corp. has about 20,000 employees, including nearly 14,000 in Sweden. Ford revealed that the unit posted a pretax profit of $53 million in the second quarter, compared with a $237 million loss a year earlier. Selling Volvo would wrap up Mulally's strategy of cutting European luxury lines to enable it to focus on Ford's namesake brand.