Ford Picks China's Geely as Preferred Volvo Bidder
By Michelle Krebs October 28, 2009Ford Motor Co.'s confirmation that it has chosen a group led by Chinese automaker Zhejiang 
Geely Group Holding as its preferred bidder for Volvo came as no surprise. Geely has long been mentioned as a potential buyer for the Swedish marque, which Ford put up for sale a year ago.
"Ford's objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties," Ford's CFO Lewis Booth, said in a statement.
Geely's position was elevated further last month when the private equity unit of Goldman Sachs announced it would invest about $250 million in Geely, which is China's largest privately owned automaker. The money will be used to boost production for Geely's homegrown models, but an investment by the prestigious Goldman Sachs helped its reputation as well.
In addition to the price, expected to be a fraction of what Ford paid at about $2 billion, the other tricky part of the Volvo-Geely deal will be to come up with a plan to continue sharing parts and technology or completely unwind Volvo which is closely intertwined with Ford's product development.
Indeed, said Booth in a statement without giving details or a timeline. ""Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand. But there is much work that needs to be completed in the more substantive discussions that are agreed to take place."
Booth said any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement our core "ONE Ford" strategy.
Ford said a year ago that it would sell Volvo to focus on its three core brands - Ford, Lincoln and Mercury. Ford bought Volvo in 1999 for $6.45 billion to be part of its now-defunct Premier Automotive Group, a plan by then CEO Jacques Nasser to consolidate luxury brands that then also included Aston Martin, Jaguar and Land Rover under one umbrella. Volvo is the last vestige of PAG.
Other groups were vying for Volvo. The Crown Group is an investment group led by former Ford executive Michael Dingman, his son James Dingman, and Shamel Rushwin, a former manufacturing and labor executive at Ford. Swedish investor Konsortium Jakob AB told the media it would continue its bid. -- Michelle Krebs, Senior Analyst and Editor at Large
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