Zhejiang Geely Holding Group Company Ltd., one of the fastest-growing car manufacturers in China, on March 28 announced it has signed a definitive stock purchase agreement with Ford Motor Company to acquire 100 percent of Volvo Car Corporation and related assets (primarily intellectual property).
The agreement was signed by Li Shufu, chairman of Zhejiang Geely Holding Group, and Lewis Booth, chief financial officer of Ford Motor Company, at a ceremony in Gothenburg, Sweden, witnessed by Li Yizhong, minister of industry and information technology of the People's Republic of China, and Maud Olofsson, Swedish deputy prime minister and minister for enterprise and energy.
"China, the largest car market in the world, will become Volvo's second home market,” said Shufu. “Volvo will be uniquely-positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market."
Alan Mulally, Ford's president and CEO, said: "Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership."
Zhejiang Geely Holding Group has secured all necessary financing to complete the transaction, which values Volvo Car Corporation at US$1.8 billion. Meanwhile, Zhejiang Geely Holding Group has secured significant working capital facilities to fund Volvo Cars' ongoing business.
The definitive transaction agreements include, in addition to the stock purchase agreement, further agreements on intellectual property rights, supply and R&D arrangements between Volvo Cars, Zhejiang Geely Holding Group and Ford Motor Company. Volvo Cars has solid ground to operate on a standalone basis and deliver its business plan for a sustainable future.
Geely intends to preserve Volvo Cars' existing manufacturing facilities in Sweden and Belgium, while exploring opportunities to manufacture Volvo vehicles in new production facilities to be built in China for the local market.
Pending regulatory approvals, the two companies expect the transaction to be completed in the third quarter of this year, when customary purchase price adjustments relating to pension deficits, debt, cash and working capital will be finalized.
As part of the proposed transaction, Zhejiang Geely Holdings will maintain the strong collaborative relationships that Volvo has built with employees, unions, suppliers, dealers and above all, customers. On completion, Volvo Cars will be a separate company with its own management team based in Gothenburg, Sweden, and a new board of directors.
The board and the management will have a mandate to develop Volvo Cars' leadership in safety and clean environmental technologies, expanding the company as a world-leading premium brand with a presence in more than 100 markets and ambitious plans in the fast-growing Chinese market.