US/SWEDEN  - Swedish car manufacturer Volvo may be sold by Ford to Chinese car manufacturer Zhejiang Geely Holding Group in a deal that values the company at around $1.8bn (€1.33bn). However, the final price could be reduced by the impact of Volvo's pension deficit.

In a statement confirming the agreement - which should be completed by the third quarter of 2010 - Ford confirmed the purchase price will be paid in the form of a $200m note and the remainder in cash, but admitted the cash portion "will be adjusted at close for customary purchase price adjustments relating to pension deficits, debt, cash and working capital, the net effect of which could be a significant decrease in the cash proceeds to Ford".

A spokesman for Ford said the impact of the pension deficit will not be determined until the close of the sale later in the year, and said an update on the pension status will be released once the transaction has completed.

Ford has confirmed Volvo will retain its pension plans and they will be part of the car business acquired by Geely, in terms of both assets and liabilities, and will be in "the same state as they were under Ford's ownership prior to the sale". The US car manufacturer also confirmed "no material special contributions will be made as part of the sale".
Full year figures for 2009 from Ford revealed that at the end of 2009 total contributions to its pension schemes worldwide totalled $900m, while the total funding status for the schemes worldwide was a deficit of $12bn. The overall funding status also excluded the figures for the Volvo pension schemes.

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