Zhejiang Geely Holding Group Co. has completed the purchase of Volvo Cars from Ford Motor Co. (NYSE: F) on Monday in the largest acquisition of an automaker by a Chinese company.
Ford received $1.3 billion in cash and a $200 million loan note for the acquisition from Geely and may make additional payments to Ford after the two companies have reviewed the books and inventories of Volvo. “There may be a further adjustment in four to five months, which is impossible to quantify,” a Geely spokesman said.
Geely confirmed that Stefan Jacoby, the former head of Volkswagen’s U.S. operations, would be the chief executive of the company, who will replace Stephen Odell, who will run Ford of Europe.
Ford Motor Co. (NYSE: F) said that it would cooperate with Volvo in several areas to provide for a smooth transition, but has not maintained any ownership in Volvo. Ford will supply Volvo with engines and other vehicle components as well as provide the new company with engineering support. Ford has also offered tooling support for common parts to Geely.
“Volvo is an excellent brand with a strong product line, and it has returned to profits after a successful restructuring. We are confident Volvo has a solid future under Geely’s ownership,” said Ford CEO Alan Mulally in a statement.
“At the same time, the sale of Volvo will allow us to sharpen our focus on the Ford brand around the world and continue to deliver on our One Ford plan serving our customers with the very best cars and trucks in the world,” Mulally said.
Mulally has previously divested ford from other premium European brands, including Jaguar, Land Rover and Ashton Martin. The Dearborn, MI-based auto manufacturer bought Volvo in 1999 for $6.45 billion in a deal that was considered one of the most successful cross-border partnerships at the time.
Shares of Ford Motor Co. (NYSE: F) traded up 2.43% on Monday morning hitting $13.08 by 10:30 AM ET on the news.
