Volvo Deal Expected To Be Sealed This Weekend
China’s vice-president Xi Jinping (above) is packing his bags for a state visit to Sweden, where he and his entourage will arrive this Saturday. He doesn’t go there to watch pretty blondes. (He doesn’t fancy blondes, see picture below.) Xi Jinping wants to come back to Beijing with a Swedish souvenir: A signed contract between Ford and Geely that will seal the sale of Volvo.
Both The Nikkei [sub] and Financial Times expect that the deal will be signed on Sunday or Monday.
Last Friday, Geely and Ford had talks at Ford’s Dearborn HQ, where “both companies have overcome obstacles to the deal,” says the FT. Barring always possible last minute problems, the deal should be ready for signing by the weekend.
China Daily, which had been sowing doubt about the deal a week ago, now also reports that “the talks are moving ahead as planned.”
What also becomes clearer is the money aspect. Ford will get $1.8bn for Volvo. Another $750m of working capital is needed by Geely to keep Volvo going. About $500m to $800m of the financing for the deal will come from the European Investment Bank, to be guaranteed by the governments of Sweden and Belgium, where Volvo has production plants. Roughly $500m will come from Swedish banks.
The remainder will come from Chinese banks, local governments and Geely itself.
Financial Times says that Ford “declined to comment, referring to former statements that it expected the deal to be signed by the end of the first quarter.” Have a look at the calendar.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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"And by the way, that beautiful lady holds the rank of a Major General. " And she also holds the microphone very nicely as she motivates the young troops for the Motherland.
Since Ford values its access to the chinese market, I wonder if, once Ford began to dance with China Inc., and once China Inc. were truly interested in buying Volvo, whether there were any way for Ford to not complete the sale at terms favourable to China (regardless of whether the terms were hardly, or at best only nominally, favourable to Ford.) Given the growth rates there, and the untapped market potential, China has huge leverage to shape deals by offering/denying cooperation, approving/denying, so many things that are critical to a going concern (conversely, since Ford is likely upside-down in the relationship, they are likely trying to find and leverage it for its goodwill potential.) It will be interesting to see if there are any major announcements from Ford China/Mazda China/etc. in the next few months.