US/SWEDEN - Ford has agreed to sell Volvo Cars to Chinese carmaker Geely but the value of the deal will be subject to negotiations on Ford's Swedish subsidiary's pension deficit.
In a statement, Ford said the purchase price for Volvo and related assets - primarily intellectual property - is US$1.8bn, which will be paid in cash, except for $200m which will be paid in the form of a note.
However, the firm said: "The cash portion of the purchase price will be adjusted at close for customary purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect of which could be a significant decrease in the cash proceeds to Ford."
Ford spokesman John Gardiner said details on Volvo Cars' pension plan will be provided only after the price adjustments are disclosed.
The sale is expected to close in the third quarter of 2010. Ford president and chief executive Alan Mulally said: "This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership."
Volvo Cars chief executive Stephen Odell added: "The Volvo management team fully endorses Ford's sale of Volvo Cars to Geely. We believe this is the right outcome for the business, and will provide Volvo Cars with the necessary resources, including the capital investment, to strengthen the business and to continue to move it forward in the future."
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