DEARBORN, Mich., July 15 — The Ford Motor Company, which is struggling to reorganize amid record losses and slumping American sales, has decided to entertain offers for Volvo, people with knowledge of the situation said Sunday.þþThe decision to talk to interested buyers followed a meeting of Ford directors last week, and comes as Ford also is trying to sell its two other European luxury brands, Jaguar and Land Rover.þþTogether with Aston-Martin, the luxury sports carmaker that Ford sold in March, the brands made up the Premier Automotive Group, which Ford once thought would generate more than $1 billion a year in profits.þþBut the idea of a collection of European brands now appears to have been set aside as Ford attempts to go back to basics, namely its car and truck business in the United States and elsewhere. Volvo, however, is attractive to a number of potential bidders because of its reputation for building safe cars. þþOne possible bidder, analysts said Sunday, was BMW, the German luxury carmaker. In May, European press reports said that BMW had asked Ford for data on Volvo; at the time, Ford said the brand was not for sale.þþCollectively, Ford could receive as much as $15 billion for all three car companies, although Volvo, which Ford bought in 1999 for $6.5 billion, may prove more difficult to untangle from its operations. þþFor one thing, Volvo was among the wide array of assets that Ford pledged as collateral last year when it borrowed $23 billion to finance its overhaul program. If Volvo is sold, Ford will have to repay the value of the loans backed by Volvo assets, adding pressure on Ford to get as much for Volvo as possible.þþIf the division were sold and the collateral issue resolved, Ford could use the cash to finance its product development operations and a trust that would shoulder its obligation for retiree health care benefits. þþAuto companies are expected to ask the United Automobile Workers union to agree to such arrangements during national contract talks that begin next Monday. Ford estimates its liability for current and future health care benefits is about $31 billion.þþOn Sunday, a spokesman for Ford of Europe, John Gardiner, said the auto company was not in discussions with any bidders for the sale of Volvo.þþ“However, as we’ve consistently been saying since last year, Ford has been assessing a number of strategic options for all of its operations, and that’s continuing,” Mr. Gardiner said. “That’s what any responsible company would do.ÿþþBankers said that Ford had not designated an investment bank to handle the sale, nor had it prepared an offer book for Volvo, a step normally taken in such transactions. þþFord wants potential bidders to make their offers by Thursday for Land Rover and Jaguar, which analysts have estimated could bring in $8 billion, if sold together. In March, it sold Aston-Martin, the British sports car maker, for $848 million to a group of investors headed by the racing mogul David Richards.þþFord paid $6.5 billion for the car operations of the Swedish automaker Volvo in 1999, in one of the first actions taken by Ford’s then-chief executive, Jacques A. Nasser, and William Clay Ford Jr., then its chairman.þþDespite its internationally known brand image, analysts said Ford paid too much for Volvo. They said the selling price might depend on whether Volvo is sold alone or with its other brands. þþ“It’s a nice brand to have, but you certainly couldn’t look at it and say that it’s absolutely essential to the future of Ford,” said Jeremy Anwyl, chief executive of Edmunds.com, a Web site that offers car-buying advice to consumers. “If you could raise $6 billion or $8 billion by selling Volvo, that would probably be a very good thing.”þþPrivate equity companies have been active players for troubled automotive companies, led by Cerberus Capital, which is buying the Chrysler Group. But Volvo, which is not in need of a turnaround, might prove a less lucrative investment for private investors, making it more attractive to a car company instead. þþThe French automaker Renault tried to merge with Volvo in the 1990s, only to see the deal shot down amid fears that Volvo’s Swedish heritage would be subsumed. þþThose fears had abated by the time Ford bought the company, which happened not long after the 1998 deal that created DaimlerChrysler. Ford promised that it would “Let Volvo be Volvo.”þþAssuming the complexities of a sale could be sorted out, Volvo could generate welcome cash for Ford, which has been saddled by big losses and sliding sales in its key North American operations. þþFord lost $12.6 billion in 2006 and has fallen to third place in the American market this year, behind Toyota. Overall, its sales are down 11.1 percent in 2007 compared with last year. þþFord does not break out separate figures for Volvo, but analysts estimate that the brand has been earning $800 million to $1 billion for Ford. þþVolvo sales have been sliding in the United States; they are down 10.2 percent this year, and fell 5 percent for all of 2006 compared with 2005, according to Autodata. þþMark Fields, the president of Ford’s operations for the Americas, played down the possibility of a Volvo sale last month. “Volvo is pretty integrated into Ford right now,” Mr. Fields told The Detroit Free Press. Mr. Fields, who is heading up Ford’s North American turnaround plan, previously led the Premier Automotive Group.þþHowever, Ford’s chief executive, Alan R. Mulally, has pressed the company to focus on its core automotive operations and to consider cutting loose anything that distracts from its essential turnaround efforts. þþ
Source: NY Times
