updated 12/23/2009 7:49:52 AM ET 2009-12-23T12:49:52

Ford Motor Co. said Wednesday it is close to selling its loss-making Volvo unit to China's Geely and expects a final deal early in 2010.

Ford said in a statement that "all substantive commercial terms relating to the potential sale of Volvo Car Corporation have been settled." Ford chose Geely as the preferred bidder for Volvo in October.

Work on financing and government approvals remains to be completed, Ford said, adding it expects the deal to close "in the second quarter 2010, subject to appropriate regulatory approvals." The announcement did not reveal the amount of Geely's offer.

In a separate statement, Geely said its negotiations with Ford had deepened since October and that it had also held "constructive" talks with Volvo's management and Swedish union and government officials.

Ford acquired Volvo in 1999 for $6.45 billion. It has wanted to unload the Swedish carmaker since last year to raise cash and focus its efforts on three core brands: Ford, Lincoln and Mercury.

For 10 years Ford and Volvo have shared safety and other technology. For instance, Ford's Taurus sedan is based on Volvo underpinnings. Any agreement with Geely is expected to include details about sharing intellectual property rights and engineering.

"The prospective sale would ensure 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 its core ONE Ford strategy," the statement said.

It said Ford expects to cooperate with Volvo Cars after the sale but doesn't intend to maintain a shareholding in Volvo.

"If a final purchase agreement is signed, as a world famous Swedish car brand, Volvo will continue to lead the trend of world auto technology in safety and environmental protection, and will quickly increase its unique competitive status in the Chinese market," Geely said.

Volvo spokeswoman Maria Bohlin called the announcement "a step in the process," but noted that the deal "still isn't complete."

Auto analyst Matts Carlson estimated the price tag for Volvo at between $2 billion-$2.3 billion and said a Geely takeover would be good for Volvo.

"Volvo gets a new owner with a lot of money and which I expect will mostly leave it alone because it knows more about vehicle development, vehicle sales and vehicle distribution," said Carlson, of the Goteborg Management Institute.

He added Volvo will also get a boost from access to China's fast-growing auto market.

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