Ford, Geely Said to Miss Feb. 14 Target on Volvo Deal
Ford Motor Co. and Zhejiang Geely Holding Group Co. are unlikely to sign a deal on the sale of the U.S. automaker’s Volvo unit by the start of the Lunar New Year on Feb. 14, said three people familiar with the negotiations.
Talks snagged on financing and document details, said one of the people, who asked not to be identified disclosing private matters. Ford Chief Financial Officer Lewis Booth didn’t go to London for a signing last weekend, as parties hoped, and is busy preparing for a Feb. 10 board meeting, said another person.
Both automakers still expect a deal signed by March 31 and completed by June 30, the people said. They had aimed for a fast-track signing by the Lunar New Year holiday, people familiar with the matter had said. Geely may pay almost $2 billion for Volvo, which Ford bought in 1999 for $6.5 billion, said the people. The stack of deal documents is more than three feet (one meter) tall, said a person familiar with the talks.
“This is an extremely complicated agreement and interaction,” said Michael Robinet, a Northville, Michigan- based auto analyst with consultant CSM Worldwide. “They’re not only negotiating a sale, they’re negotiating a complete, intertwined relationship that will last for several years.”
Ford and Geely, based in Hangzhou, China, have been working out details on how long Ford will supply engines and other components to Volvo, said one of the people. Volvo also supplies diesel engines for Ford’s European models. Several Ford and Volvo models share mechanical foundations, such as the Volvo S40 that’s based on a Ford Focus.
A Ford spokesman, Mark Truby, said the Dearborn, Michigan- based automaker’s “goal is to have a definitive sales agreement signed in the first quarter and a completed deal by the end of the second quarter.”
Geely is “aiming to sign the deal by the end of first quarter and finish the sale by June 30,” said spokesman Yuan Xiaolin. “As we approach the final stage, we are currently focusing on finalizing legal documentation.”
Ford, which lost $30 billion in the 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. The automaker on Jan. 28 reported 2009 net income of $2.7 billion.
Privately held Geely, China’s 10th-largest automaker based on 2009 sales, would be buying a western brand with U.S. sales that rose 42 percent last month. The Swedish automaker had a pretax operating loss of $32 million in the fourth quarter, compared with an operating loss of $736 million a year earlier, Ford said. Volvo’s revenue grew to $3.9 billion in the final three months of 2009, up from $3.3 billion a year earlier.
Ford rose 19 cents to $11.16 at 9:35 a.m. in New York Stock Exchange composite trading.