Brazil automaker CAOA signs preliminary agreement to buy Ford plant

SAO PAULO (Reuters) – Brazilian automaker CAOA has reached a preliminary agreement to buy Ford Motor Co’s plant in Sao Bernardo do Campo, which the U.S. automaker will close by year’s end as part of a global restructuring, the companies said on Tuesday.

CAOA and Ford have been negotiating the purchase since February, Reuters reported at the time, and the companies said they will now undergo a due diligence process for 45 days before closing any deal.

The announcement was hosted by Sao Paulo state governor Joao Doria, who rushed to find a buyer in February when Ford announced it would shut down the plant, risking some 3,000 jobs.

Brazil has long attracted the world’s biggest automakers to set up shop here, but CAOA is the rare carmaker that is actually domestically owned. It has struck deals to make cars for Korea’s Hyundai and co-owns China’s Chery operation in Brazil, whose cars now are branded as CAOA Chery.

Doria has defended Sao Paulo as a manufacturing hub at a time when the auto industry turned to other Brazilian states that were offering aggressive tax incentives.

Ford had opened the plant in 1967, and it is the company’s oldest in the country. It was primarily used to make heavy trucks as well as the compact Ford Fiesta, a sales laggard. Ford is undergoing a global restructuring and said it would focus on a much newer plant located in the Northeastern state of Bahia.