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March 19, 2010

CHINA: Volvo negotiations tough going for Geely

Zhijiang Geely Holding Group reportedly is finding negotiations with Ford tough going as it works on a deal to buy the Swedish Volvo Cars unit.

Zhijiang Geely Holding Group reportedly is finding negotiations with Ford tough going as it works on a deal to buy the Swedish Volvo Cars unit.

Chairman Li Shufu told the Wall Street Journal that talks had hit a snag due to problems at Ford, although the US carmaker’s boss did not see it that way.

Chief executive officer Alan Mulally said negotiations were proceeding and the two companies were making progress.

Le told the WSJ that Geely was ready to seal the deal but that the situation was changing constantly and the negotiation process “very tough”.

He added: “If the deal fails, the problem is not on our side. We have not violated any part of the agreement.” Li did not specify what the problems were.

Zhejiang Geely, the parent of Geely Automobile, plans to complete the purchase of Volvo for up to US$2 bn by May, according to a document seen by Reuters.

Geely’s spokesman told Reuters that the company’s aim to sign a sales and purchase agreement by the end of March and complete the deal in the second quarter had not changed.

The China Daily, citing sources close to the situation, said that financing and technology transfer issues might delay a sale.

A Ford spokesman said the company was still expecting to sign an agreement in the first quarter while a Geely spokesman said it remained confident of securing a transaction.

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