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NEWS FLASH
BY KEITH NAUGHTON IN DETROIT WITH STANLEY REED IN LONDON
JANUARY 27, 1999
Ford Is Set to Put Volvo in Its Garage
On Thursday, Jan. 28, Business Week has learned, Ford Motor Co. plans to announce its acquisition of Volvo's car business -- for $6 billion, according to sources familiar with the negotiations. The sources tell Business Week that Ford's bid beat out an offer by Italy's Fiat, which was willing to pay as much as $7 billion, but Fiat wanted the Volvo truck business as well. Volkswagen is also believed to have been among the final bidders.
If the deal with Ford goes through, Volvo is expected to try for a separate agreement to beef up its profitable heavy-truck business by teaming up with Scania, another Swedish truckmaker.
For Ford, the world's No. 2 carmaker, the much-sought Volvo is regarded as a good fit. Its 400,000-unit annual output will lift Ford's worldwide vechicle sales to 7.2 million -- putting it within striking distance of General Motors. Also, Volvo's cars give Ford offerings in the $30,000 to $40,000 luxury-car range. Ford, which has also been considering possible links with Honda and BMW, may make other deals, analysts say. Its balance sheet -- before the Volvo deal -- carries $24 billion in cash.
Copyright 1999, Bloomberg L.P.