Geely secures financing, to buy Volvo for 2 Billion USD

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Various media outlets are reporting that Geely has officially got the funds needed to take over Volvo, the reported price tag being 2 billion USD, a far cry from the 6 billion that Ford originally bought Volvo for. Geely’s financing has reportedly come from government institutions as well as local banks that are all clearly behind Geely in its bid for international success.

Reuters gives more detail:

STOCKHOLM — Chinese carmaker Geely has secured financing for its planned purchase of Volvo Cars from US auto giant Ford from Chinese financial institutes and regional authorities, a report said Wednesday.

“Financing for the Volvo deal was concluded in recent days,” a source told the Swedish financial daily Dagens Industri (DI).

“The money is now in Geely’s bank account. Documentation has been shown to Ford and has been approved,” said the source, described as ‘close to the matter.’

In addition, DI reported, Geely had secured guarantees of financial support to cover possible future Volvo losses.

“Documentation on this has also been shown and approved by Ford,” the source said.

It could still take time for the deal to be finalised as the parties still need to go over all the relevant documents and make sure they are in line with legislation in China, Sweden and the United States, DI said.

“This is a very complex and time-consuming process,” DI’s source said, adding that approvals were still needed from some of the relevant authorities.

Ford announced in late 2009 it had agreed terms to sell its Swedish subsidiary Volvo Cars to Geely for a reported 2.0 billion dollars (1.5 billion euros).

If completed, the deal will bring to an end Ford’s decade-long association with the Swedish brand.

According to reports, Geely does not plan to move production of Volvo Cars to China.

Nonetheless, trade union leaders in Sweden have expressed fears that the deal with Geely will mean cuts at Volvo Cars, which has 22,000 employees worldwide, including 16,000 in the Scandinavian country.

The last part may not be true, Geely are planning on building a large factory in Beijing that is expected to increase Volvo’s international production by nearly 100%. The Beijing factory is set to supply the explosive Chinese market with Volvo models and is expected to ‘earn back’ what Geely have invested into the Swedish automaker.