23 Dec 2009
Dec. 23 (Bloomberg) -- Ford Motor Co., seeking to unload its unprofitable Volvo unit, will announce today that talks with Zhejiang Geely Holding Group Co. have progressed to the point where a sale is likely, a person familiar with the matter said.Ford, which named China's Geely its "preferred bidder" for Volvo on Oct. 28, also will lay out an estimated timeline for completing the sale in a statement to be issued today, said the person, who asked not to be identified because the details aren't public yet. John Gardiner, a Ford of Europe spokesman, didn't immediately respond to a request for comment.
Volvo was put on the block a year ago as Ford finishes shedding overseas luxury brands to focus on its namesake division. Geely is offering about $2 billion, less than one- third what Dearborn, Michigan-based Ford paid for the Swedish unit a decade ago, people familiar with the bid have said.
"Ford has integrated Volvo into their platforms and a lot of technology, like safety technology," said John Wolkonowicz, an analyst at IHS Global Insight of Lexington, Massachusetts. "Why prop up China with your technology when you know they're going to become a major competitor someday?"
Ford has been making progress to resolve sale issues such as protection of intellectual property, a person familiar with the talks has said. Geely hopes to gain insights into Western vehicle development and manufacturing through Volvo, people familiar with the negotiations have said.
Ford rose 2.4 percent to $9.90 in New York trading yesterday.
Government Support
Geely is seeking Chinese government support for the Volvo acquisition, two people familiar with the discussions have said. The company has hired German-based Roland Berger Strategy Consultants for advice on restructuring, the people said.
Geely Automobile Holding Ltd. is the listed unit of Li Shufu's Geely Group. Zhejiang Geely, owned 90 percent by Li and 10 percent by his son, is the ultimate holding company for the group. Yuan Xiaolin, a spokesman for the holding company, wasn't immediately available to comment.
Intellectual-property protection was a stumbling block in the takeover because Ford will continue supplying components following a sale. Ford's board was recently given a status report, according to a person, who asked not to be identified as having revealed internal discussions.
Geely Group said last month the Swedish company would retain ownership of technology following the sale.
The group's Hong Kong-listed unit Geely Automobile Holdings rose 4.2 percent to HK$3.71 in trading in the city yesterday. It has risen sixfold this year.
Geely, Beijing Automotive Industry Holding Co. and other Chinese automakers are acquiring assets from overseas automakers to develop more own models. Beijing Auto earlier this month agreed to buy some assets of General Motors Co.'s Saab unit ahead of its introduction of self-developed cars next year.
