Ford Motor Co. (NYSE: F) announced on Sunday that it would be selling its Volvo subsidiary to a Zhejiang Geely Holding Group, a Chinese conglomerate.
Geely will pay approximately $1.8 billion for Volvo. The deal consist of $1.6 billion in cash and the remaining balance will be financed by Ford directly.
China surpassed the U.S. as the largest car market in the world during 2009 and is eager to improve its competitive edge in the automotive industry. The deal will give China a luxury brand that is considered to have a reputation for quality and safety.
Ford will be receiving $4.65 billion less than the $6.45 billion that it paid for the Swedish automaker back in 1999.
Geely said that it intends to keep Volvo’s existing manufacturing facilities in Sweden and Belgium but may also look at building additional manufacturing facilities in China.
