Ford picks China's Geely to bid for Volvo Cars

Chinese automaker Geely is the only remaining bidder for the purchase Volvo Cars, the Swedish carmaker's US-based owner Ford announced on Wednesday.

• Geely withdraws reported offer for Volvo (16 Sep 09)
• Geely confirms Volvo interest (8 Sep 09)
• China's Geely to buy Volvo Cars: report (18 Jun 09)

According to a statement from Ford, Geely is the company’s "preferred bidder" in the bidding process.

Ford also said negotiations are continuing and no final decision has been made. Nor is there any time limit for concluding negotiations.

"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," he said, adding "much work ... needs to be completed" and there was "no specific timeline" for concluding talks.

"Ford's objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties...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."

Upon an eventual sale, Ford doesn’t plan on retaining any ownership stake in Volvo Cars, according to the US automaker.

Citing sources close to the negotiations between Geely and Ford, the Bloomberg news agency reports that Geely, China's largest independent automaker, is prepared to pay up to $2 billion for the unit, which is less than a third of what Ford paid when it purchased Volvo ten years ago.

John Fleming, chairman of Ford's European operations, including Volvo, said that "any sale also would need to take into account the significant connections between Ford and Volvo in terms of continuing component supply, engineering and manufacturing."

The Hangzhou-based Geely said that under its bid, supported by Chinese banks, Volvo's existing production and research and development facilities, union agreements and dealer networks would be maintained.

"Should a final agreement be reached, Geely will safeguard and strengthen Volvo's world-renowned brand heritage, ensuring its continued leadership as a premium car company with a global reputation for safety and environmental technologies," said Li Shufu, Geely chairman, in a separate statement.

"This is an important strategic step for Geely, signaling our commitment to Volvo's presence in more than 100 markets around the world and building on our strengths in the Chinese car industry."

Stephen Odell, CEO of Volvo Cars, welcomed Ford's announcement as "a positive step forward" for the loss-making carmaker.

"At Volvo, we are continuing to keep our attention firmly fixed on engineering and building great Volvo cars, to reduce our cost base and to return the business to sustainable profitability at the earliest possible opportunity," he said in a statement.

"Ford has acted as a responsible owner. Under these hard economic times we have gone through, Ford has supported us in many ways," he said later on Wednesday while speaking at a news conference at the company's headquarters in Gothenburg, where the firm was founded in 1927.

Swedish Enterprise and Energy Minister Maud Olofsson said the news was "good, because the uncertainty has not been good for Volvo."

"And we have told Geely and everyone else that we have been in talks with
that we want production to stay in Sweden," she added.