By Keith Naughton and Ola Kinnander
March 23 (Bloomberg) -- Ford Motor Co. aims to sign a deal to sell its Volvo unit for $1.8 billion on March 28, three days before its target date, according to three people briefed on the negotiations.
The signing with China’s Zhejiang Geely Holding Group Co. may take an additional day, said the people, who asked not to be identified because the discussions are private. Ford wants to conclude almost two years of talks to finish a sale before a June 30 deadline the parties set; Geely is unsure it can get China approvals by that time, said two people.
Ford, which lost $30 billion in three years beginning in 2006, put Volvo up for sale in late 2008 as it shed European luxury lines to concentrate on its namesake brand. Ford acquired Volvo for $6.5 billion in 1999. Closely held Geely, China’s 10th-largest automaker based on 2009 sales, is buying a Western brand with U.S. sales that have risen 40 percent this year.
“Ford needs money and they need to concentrate on their core brands,” said John Wolkonowicz, an auto analyst at IHS Global Insight in Lexington, Massachusetts. “For Geely, this gives them immediate credibility and puts them on the fast track for becoming a viable company to sell vehicles in the West.”
Ford Chief Executive Officer Alan Mulally has sold the Jaguar, Land Rover and Aston Martin luxury brands since 2007. The Dearborn, Michigan-based automaker will still provide Volvo with auto parts and technology, Mulally said March 18.
‘Money Sink’
The Swedish automaker had a pretax operating loss of $32 million in the final three months of 2009, compared with an operating loss of $736 million a year earlier, Ford said. Volvo’s revenue climbed to $3.9 billion from $3.3 billion.
Ford spokesman Mark Truby said today by e-mail, “Our plan remains to reach a sale agreement by the end of this month.”
“The ambition remains to get this done by the end of the month,” Anders Fogel, a partner at Brunswick Group in Stockholm who acts as a Geely spokesman.
Ford fell 9 cents, or less than 1 percent, to $13.90 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 40 percent this year, following a fourfold increase last year.
General Motors Co. last month failed to complete a sale of its Hummer line of sport-utility vehicles to Sichuan Tengzhong Heavy Industrial Machinery Co. after failing to win Chinese government approval, the Detroit-based automaker said. GM has said it will consider other bidders for Hummer, and may retire the brand.
In selling Volvo, Ford will lose its last global luxury brand, Wolkonowicz said. Ford’s Lincoln line is mainly U.S. Ford improved Volvo’s quality and expanded the brand’s model range without getting a return on its investment, Wolkonowicz said.
“Volvo was a money sink for Ford, which is why they really did need to get rid of it,” he said.
To contact the reporters on this story: Keith Naughton in Dearborn, Michigan, at Knaughton3@bloomberg.net; Ola Kinnander in Stockholm at okinnander@bloomberg.net.
Last Updated: March 23, 2010 16:15 EDT |
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