Ford Appears Close to Finalizing Sale of Volvo to Chinese Automaker, Geely

According to a European-based spokesman for Chinese automaker, Geely Automobile, company representatives are meeting with executives from Ford Motor Company in Sweden this week to discuss Geely’s bid for Ford’s Volvo brand.

In October, Ford named Geely’s parent company, Zhejaing Geely Holding Group, as the preferred bidder for the company’s Swedish automotive division which has been awash in red ink recently.

A negotiating team for Geely is scheduled to meet with Ford and Volvo representatives as well as officials for Volvo’s labor unions and officials of the Swedish government. The meetings are scheduled to take place in Gothenburg and Stockholm.

Among the issues slated to be discussed is the intricate transfer of Volvo’s intellectual property rights to the successful bidder.

Ford is no stranger to the process and a spokesman for the company said he is confident the automaker can protect sensitive information during the transfer of ownership. He said Ford was able to overcome similar challenges in the sales of its Land Rover and Jaguar divisions to Indian-based Tata Motors Ltd. in 2008.

An individual close to the current negotiations said that Ford’s announcement of Geely as a preferred bidder indicates that both sides have made substantive progress toward finalizing the sale.

On Tuesday, a Chinese newspaper reported that a spokesman for Geely said the parties have agreed that Volvo will retain its rights to licensed technologies but will allow Geely to use them.

The Shanghai Securities News also reported that Yuan Xiaolin, a spokesman for Geely, confirmed that Volvo will retain its research and manufacturing facilities and dealerships and will honor existing agreements with labor unions. Yuan declined to give a timetable for Volvo’s sale but said that Ford and Geely are currently involved in detailed talks toward that eventuality.

Neither Ford nor Geely representatives in Europe would comment on the report. Geely’s chairman, Li Shufu, last month said he is confident the company will prevail in its bid for Volvo.

Earlier this month, The Wall Street Journal reported that Geely will build a new plant in China capable of manufacturing 300,000 Volvo-branded vehicles annually. The report went on to say that, under Geely’s control, Volvo could potentially see global sales of up to 1 million vehicles annually compared with their current level of about 400,000 units.

No disclosure has been made of Geely’s bid price, but some media reports have suggested that it could be close to $2 billion. In 1999, Ford bought Volvo for $6.45 billion.

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