Volvo deal stalls on financing
FORD has said it is unlikely to complete on schedule a deal with Chinese firm Geely Automotive for the purchase of Swedish carmaker Volvo.
Negotiations are said to have stalled on financing and the proposed date for the deal to be sealed – February 14 – was now likely to slip, probably until the end of March.
Analysts have said they are not surprised the schedule has slipped because of the complex nature of the deal.
Geely, a partner with Coventry-based taxi-maker Manganese Bronze, is expected to pay around £1b for the Swedish manufacturer and the deal underlines the company’s ambitions as it sets out to become one of the major players in the Chinese automotive market.
The sale would also underline the continuing shift in focus of the global automotive industry with Asian companies increasingly in the ascendency.
Although details of the deal are secret, it is believed that Ford, which originally acquired Volvo for $6.5b in 1999, will contribute to Volvo’s pension fund, which could reduce its proceeds from the sale by between $200m to $300m.
The deal will need to be approved by the Chinese government and full details of the agreement such as how long Ford will supply engines and other components to Volvo are still being hammered out.
Should the March 31 deadline be achieved then the sale could be complete by the end of June.
The sale could come at a good time for Geely, with Ford claiming Volvo sales rose 13.8% in the United States in December.
Once the sale is completed then it will mean the end of Ford’s once proud Premier Automotive Group, a stable which in addition to Volvo, also included the luxury marques of Aston Martin, Jaguar and Land Rover.
