China's Ministry of Commerce said it has approved Zhejiang Geely Holding Group Co's purchase of Ford Motor Co's Volvo Car unit, paving the way for completion of the $1.8 billion acquisition agreed by the two companies in March.
The ministry signed off the deal recently, a ministry spokesman said by telephone today from Beijing.
Geely agreed on March 28 to buy the Volvo Car business from Ford, marking the biggest overseas acquisition by a Chinese automaker. Volvo is the latest premium European brand to be sold off by Ford Chief Executive Officer Alan Mulally, who has divested Aston Martin, Land Rover and Jaguar since joining the carmaker from Boeing Co in 2006.
Geely Automobile Holdings Ltd, Geely's Hong Kong traded unit, rose as much as 7.9 percent today and changed hands for HK$2.81 (36 cents) at the 12:30 pm midday break. The stock has fallen 34 percent this year, compared with the benchmark Hang Seng Index's 3.7 percent decline.
Ning Shuyong, a spokesman for Geely, declined to make an immediate comment as he was in a meeting.
The US automaker, based in Dearborn, Michigan, plans to complete its sale of Volvo to Geely next week, according to two people familiar with the plans. Ford and Geely executives are aiming to close the sale, pending final regulatory approvals and financing, said the people, who asked not to be identified revealing internal plans.
Ford has said it will continue to supply Volvo with engines, transmissions and other vehicle components. It also agreed to provide engineering and technology support and access to tooling for common components for an unspecified period.
Volvo Car has about 20,000 employees worldwide, including almost 14,000 in Sweden. The unit had pretax profit of $53 million in the second quarter, compared with a $237 million loss a year earlier, Ford said last week.
Selling Volvo would complete Mulally's strategy of exiting European luxury lines to focus on Ford's namesake brand.