| On March 30, China's Zhejiang Geely Holding Group held a news conference in Beijing, announcing that Geely has lined up total financing of US$2.7 billion to back its purchase of the US auto giant's Volvo car unit from Ford Motor Co.
The extra US$900 million above the reported purchase price will be invested to grow Volvo Cars' business and draw down capital during fallow cycles in the auto industry, said Li Shufu, founder and chairman of Geely, at the new conference.
Geely signed a binding deal with Ford at Volvo's headquarters in Gothenburg, Sweden, on March 28 for the biggest Chinese acquisition of an overseas automaker. The Chinese automaker will pay Ford US$1.6 billion in cash, and the remainder in the form of a US$200 million note.
Under the definitive stock purchase deal, Geely will own 100 percent of Volvo Cars and its related assets.
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On March 30, China's Zhejiang Geely Holding Group held a news conference in Beijing. |
Geely said it has secured all the financing – from Chinese and overseas investors, and financial institutions, necessary to complete the deal, as well as "significant working capital facilities to fund Volvo Cars' ongoing business."
The deal also covers further agreements on intellectual property rights, supply, and research and development arrangements between Volvo Cars, Geely and Ford, which will provide a solid foundation for Volvo to continue its separate operation and move it forward in the future.
Li Shufu also promised that Geely will maintain the strong collaborative relations that Volvo has built with employees, unions, suppliers, dealers and above all, customers.
Volvo Cars will eventually become a separate company with its own management team based in Goteborg and a new board of directors.
Geely said it aims to keep Volvo's existing manufacturing facilities in Sweden and Belgium, but that it also will explore manufacturing opportunities in China.
The sale is expected to be completed in the third quarter of this year, subject to regulatory approvals.
Background:
Geely, which started to manufacture cars in 1998, is a major private automaker in China, with its headquarters based in southeast China's Zhejiang Province. Geely Holding Group is the parent company of Geely Automobile Holdings. |
