AB Volvo has reached an agreement with Ford Motor Company for the
sale of Volvo's passenger car business, Volvo Cars for a price of US$6.45 billion. The
sale, which is conditional on both Volvo shareholder and customary regulatory approval,
improves Volvo Cars' future prospects and allows Volvo to focus fully on its commercial
vehicles and related businesses, incorporating trucks, buses, construction equipment,
marine engines and aerospace equipment.
Volvo has completed a strategic review of its businesses, which concluded that a sale
of Volvo Cars to Ford is in the best interests of both Volvo Cars and Volvo’s
shareholders.
"Our 21st century vision is to become the world's leading consumer company
providing automotive products and services," said Ford chairman William Clay Ford Jr.
"The addition of Volvo is a meaningful step toward achieving this vision."
Volvo Cars is a premium automotive brand and has both a strong product program and
above industry-average profitability. However, over the longer term and within the context
of its current position as a relatively small niche player, Volvo Cars would benefit from
the economies of scale inherent in being part of a very large automotive company.
In particular these would apply to the significant investments required in both the
development of new car generations and in distribution.
Volvo and thereby Volvo shareholders will benefit from both the full and fair price
received from the sale of Volvo Cars, and the enhanced financial strength with which the
group is now able to implement its growth strategy in commercial vehicles and related
businesses.
Volvo’s commercial products today hold strong positions in markets worldwide. As
previously announced, it is the Group’s intention to further strengthen these
positions by means of both organic and acquisition-led growth.
Volvo's announced interest in a merger or in other combinations with Scania is an
example of one alternative among others to participate in the consolidation process in the
truck industry.
Similar expansion opportunities exist across other commercial product areas.
The Volvo Board of Directors has decided to recommend to the shareholders the sale of
Volvo Cars to Ford.
Volvo’s Chairman, Mr Håkan Frisinger says: "This a solution which strongly
enhances both the prospects for Volvo Cars, its employees and for the Volvo Group as a
whole".
Ford has informed Volvo that according to it's plans, Volvo Cars will remain managed
from Gothenburg while having full access to Ford’s engineering, distribution,
purchasing, marketing and financial resources. The combination enhances the long term
prospects of Volvo Cars and the Sweden based passenger car industry.
Volvo Cars’ President, Mr Tuve Johannesson, will remain in his position.
The Volvo brand name will be jointly owned with the right for Ford to use it for
passenger cars, minivans, sport utility vehicles and light trucks. Volvo will use the
brand name for commercial and other products.
"The proposed sale of Volvo Cars to Ford will have very important benefits to the
parties concerned," says Leif Johansson, Volvo’s Chief Executive Officer.
"Volvo will be able to concentrate its management and financial resources to
become a global and leading player within commercial products to the benefit of
Volvo’s shareholders, employees and customers. Volvo Cars' future prospects will, by
being an important part of one of the world´s largest and most profitable automotive
groups, improve considerably."
"Volvo is a premium automotive brand with unique appeal that represents a good
opportunity to profitably extend our lineup and grow the Ford business worldwide",
says Jacques Nasser, Ford President and Chief Executive Officer.
"Volvo is a perfect complement to the Ford family of brands worldwide. Volvo has a
world-class reputation for safety, quality, durability and environmental responsibility,
all of which are attributes that are increasingly important to customers, and fit with our
21st century vision for Ford.
"Ford has been operating in Sweden since 1924, and today we sell passenger and
commercial vehicles through a network of 87 dealers there. We are not just in Sweden, we
are part of Sweden. And through our new relationship with Volvo, we plan to be part of the
fabric of the country for many years to come."
Volvo and Ford have signed a Heads of Agreement with the intention of concluding a
definitive sale and purchase agreement as soon as practicable. In due course,
Volvo´" shareholders will receive a circular providing details of the proposed sale
and a notice of a General Meeting.
