Ford Motor Company (F) announced Monday that it would sell its Volvo car unit to China-based Zhejiang Geely Holding Group Company Limited.
Zhejiang Geely will pay ford $1.6 billion U.S. in cash for Volvo Car Corporation, with the remaining $200 million U.S. coming in the form of a note. However, the cash portion of the deal could be significantly altered after adjusting for pension deficits, cash, working capital, debt, and other effects.
Ford's CEO Alan Mulally said that "Volvo is a great brand with an excellent product lineup. This agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership."
In pursuant to the agreement, Ford will assist in Volvo operations to ensure a smooth transition, and will also continue to supply Volvo for certain periods with vehicle components powertrains and stampings.
Ford shares fell 24 cents U.S., or 1.7%, in premarket trading Monday.
The Bottom Line
Shares of Ford are slightly off the 52-week high levels of $14.50 U.S. a share. The stock has technical support in the $10 U.S. price area. If the shares can firm up, there could be overhead resistance around the $17 U.S. price level. The company is being closely watched.
Ford Motor Company (F) does not currently pay a dividend.
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