 |
The total purchase price for Volvo and its assets as mentioned in an agreement signed quite some time back in March was at $1.8 billion, which included a $200 million note and the balance in cash, with the cash portion being subject to purchase price adjustments at the closing. Geely has issued the note and also done with the payment of $1.3 billion in cash to complete the sale.
Ford, under the terms of sale, will continue to cooperate with Volvo in many areas to ensure a smooth transition, but will not have any ownership left in the Volvo business. Ford will however, continue to remain as the powertrain supplier of Volvo, stampings and other vehicle components for an undisclosed period of time. Engineering support as well as access to information technology will be provided by Ford to Volvo.
Volvo's intellectual property which was co-developed with Ford has been set in such a way that the sale agreement will allow Volvo to grant sub-licenses to certain parts of their intellectual property to third parties, which includes Geely. PowerShift clutch technology, forced-induction powertrain knowledge are some examples of the intellectual property existing with Volvo.
The Geely deal puts the Volvo lineup for the future in uncertainty. The Swedish company had launched its 2010 XC60 and had refreshed the C70 convertible for their 2011 lineup. The all new S60 was also in the books to be unveiled.
According to reports, Geely hopes to shift Volvo production to a new factory in Guangdong Province of China. A future relation with China will surely make Sweden as a center of product planning. As for the fate of Ford, the Volvo company had seen profit after many years of losses. The Swedish automaker had a pretax profit of $53 million in their second quarter, and this was in comparison to the $237 million loss which they had incurred, the same quarter, a year back.
