Ford, Geely agree on Volvo, to complete sale by June

Ford Motor Co. agreed with China's Zhejiang Geely Holding Group Co. on most terms for a sale of the U.S. automaker's Volvo Car Corp. unit in the second quarter.

A definitive agreement probably will be signed by March 31, with a sale completed by June 30, the companies said in statements today. No financial details were provided. Ford has made progress to resolve issues such as protecting intellectual property, a person familiar with the talks has said.

Ford named Geely its preferred bidder for Volvo on Oct. 28 after putting the Swedish automaker on the block a year ago to finish unloading overseas luxury brands and focus on its namesake division. Geely is offering about $2 billion, less than one-third what Dearborn, Michigan-based Ford paid for Volvo a decade ago, people familiar with the bid have said.

"It gives Geely a very good platform, an established brand, a presence," said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. "If they've got the deep pockets so they can put money into the R&D and modern design, they should be able to take the brand further forward."

Geely, China's largest private automaker based on last year's sales, wants to gain insights into Western vehicle development and manufacturing through buying a mainstream European brand, people familiar with the negotiations have said.

Ford rose 18 cents, or 1.8 percent, to $10.08 at 4 p.m. in New York Stock Exchange composite trading, the highest since Sept. 7, 2005. The shares have more than quadrupled this year.

The announcement came after the close of trading in Hong Kong, and Geely Automobile Holdings Ltd., Zhejiang Geely's listed unit, had jumped 7.3 percent to HK$3.98 on the city's stock exchange, the steepest increase since Nov. 30. The shares have risen sixfold this year.

China Factory?

Geely is planning to build a Volvo factory in China after the purchase, two people familiar with the proposal have said. The automaker may build the plant in Beijing, said the people, who declined to be identified because the discussions aren't public. Geely also is considering two other Chinese cities for the facility, they said.