Ford, Chinese co broadly agree to Volvo sale

The US car-maker Ford Motor has agreed to all "substantiative commercial terms" related to the planned sale of its Swedish business Volvo Car Corp to Chinese auto-maker Zhejiang Geely Holding.

Confirming the potential deal with the Chinese entity, Ford in a statement today said it expects to finalise the deal by early next year.

"All substantive commercial terms relating to the potential sale of Volvo have been settled between Ford and Zhejiang Geely Holding," the statement said.

Both the companies anticipate that a definitive sale pact will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter 2010.

However, Ford noted that some work including final documentation, and financing are yet to be completed.

According to Ford, which is the only Big 3 that survived the recession without a government bailout, even though it would continue to co-operate with Volvo Cars in several areas after a possible sale, it does not intend to retain a shareholding in the business.

"The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise," the statement added.