Ford Motor Company (NYSE:F - news) plans to invest 675 million euros ($931 million) in Romanian carmaker Automobile Craiova (AUCSxm.BRQ) if it wins a tender to acquire a majority stake in the company, it said on Monday.
Earlier this month, Ford submitted the sole bid in a tendering for a 72.4 percent stake of the plant in a sale which the centrist government hopes to wrap up by September 1.
"If the Ford bid is successful, the company would commit to investing 675 million euros in the site to upgrade and modernize the plant in line with global Ford Motor Company standards," Ford said in a statement.
Ford's strategy for the Craiova-based plant was discussed on Monday at meetings between Romania Prime Minister Calin Tariceanu and Ford of Europe President and CEO John Fleming.
The U.S. carmaker, which also said it plans to raise employment levels to 7,000, and potentially up to 9,000, from 3,900 at present, plans to reach output of 300,000 units a year.
The plant produced 24,000 vehicles in 2006.
"By 2012, we would expect to be spending around one billion euros a year in Romania to support the Craiova plant," Fleming said.
The Romanian cabinet bought back the troubled Craiova carmaker from its bankrupt owner, Daewoo Motor, in late 2006 for $51 million and paid another $10 million for debts stemming from past loans secured by the Korean company.
On Monday, Tariceanu said Ford's technical offer meets the government's expectations. Its financial offer has yet to be opened by Romanian authorities.
Many auto-part makers have set up in the new European Union member country recently, attracted by the rising output of Renault's (RENA.PA) Dacia plant, cheap labor and favorable tax rates.