Geely may sign initial Volvo deal in early Feb

Shanghai, January 26 (Gasgoo.com) Geely may sign a preliminary agreement on February 8 to buy Ford's Volvo unit, the Economic Observer reported today, adding that the Volvo deal would cost Geely around $1.6 billion. 

Zhejiang Geely Holding Group will set up a separate company with registered capital of 8 billion yuan ($1.17 billion) to buy Volvo. Foreign strategic investors and the group's Hong Kong-listed Geely Auto will hold a 51% stake of the company.

Under the soon-to-be-signed deal, Geely will keep the brand and operations in Sweden, including Volvo's headquarters, production facility and research center, intact after the acquisition, according to a Reuters report citing a Geely document.

As part of its plan to turn around loss-making Volvo, Geely plans to produce 300,000 Volvo brand cars annually in a Volvo factory that Geely will build in Beijing, according to a source.

The source said the deal to acquire Volvo was expected to close around May, following signing of the initial agreement early next month.

The net assets of Volvo to be bought by Greely were evaluated at $1.5 billion. In 1999, Volvo cost Ford $6.45 billion.