Ford, Geely may sign Volvo sale deal by mid-Feb

Shanghai, January 28 (Gasgoo.com) Ford Motor and Zhejiang Geely Holding Group plan to sign a deal on the sale of the U.S. automaker's Volvo unit by the Chinese New Year which falls on Feb. 14 this year, Bloomberg reported today, citing sources familiar with the talks.

Geely will likely to pay less than $2 billion for Volvo, which Ford acquired in 1999 for $6.5 billion, said the insiders. Ford is expected to contribute to Volvo's pension fund, which could reduce its proceeds from the sale by up to $300 million.

While awaiting China's regulatory approval for the deal, Geely and Ford are still working out details on how long Ford will supply engines and other components to Volvo, and hope to have those issues settled by the Chinese holiday. Last month Ford said the sale would be completed by the end of June.

Geely is planning to build a Volvo factory in Beijing, where up to 300,000 Volvo cars will be produced annually, doubling its output to pull the Swedish brand out of the red by 2011.

Earlier this week, media said Geely may sign an initial agreement on Feb. 8 to buy Ford's Volvo unit, adding that the Volvo deal would cost Geely around $1.6 billion.