Ford, Geely miss New Year deal date
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Ford Motor Co and Zhejiang Geely Holding Group Co are unlikely to sign a deal on the sale of the US automaker's Volvo unit by the start of the Lunar New Year on Feb 14, said three people familiar with the negotiations.
Negotiations have snagged on financing and details in the signing documents, said one of the people, who asked not to be identified disclosing private talks.
Ford Chief Financial Officer Lewis Booth did not come to London for a signing last weekend, as the parties hoped, and then was tied up preparing for Ford's board of directors meeting yesterday, said another one of the people.
Both automakers still expect the deal to be signed by March 31 and completed by June 30, the people said. They had been aiming, though, for a fast-track signing by the Lunar New Year, people familiar with the matter had said.
Geely, based in Hangzhou, is expected to pay almost $2 billion for Volvo, which Ford acquired in 1999 for $6.5 billion, said the sources.
"This is an extremely complicated agreement and interaction," said Michael Robinet, an auto analyst with consultant CSM Worldwide from Northville, Michigan. "They're not only negotiating a sale, they're negotiating a complete, intertwined relationship that will last for several years."
Ford and Geely 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 is based on a Ford Focus.
"There are various areas of documentation still being worked out," said Tim Burt, a London-based spokesman for Geely. "The process remains on track and the intention remains to have it signed by the end of the first quarter."
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 the 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 owned Geely, China's 10th-largest automaker based on 2009 sales, would be buying a Western brand with US sales that rose 42 percent last month. The Swedish automaker had a pre-tax 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.
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