FW: Ford Denies It's in Talks to Sell Volvo
Michael Loiacano
-----Original Message-----
From: Michael Loiacano
Sent: Monday, July 16, 2007 8:02 AM
To: Michael Loiacano
Subject: Ford Denies It's in Talks to Sell Volvo
DETROIT - Ford Motor Co., responding to reports that it's putting its
Volvo unit up for sale, said it is not negotiating with anyone to sell
the Swedish automaker.
The Sunday Times, citing unnamed sources in London, said the decision to
sell Volvo, which is part of Ford's Premier Automotive Group, was made
in the past two weeks, but that the timing of the sale had yet to be
decided.
The New York Times, in a story posted Sunday on its Web site, said Ford
would entertain offers for Volvo following a board meeting last week.
The newspaper cited people whom it didn't name who it said had knowledge
of the situation.
Ford spokesman Tom Hoyt said in an interview with The Associated Press
on Sunday that the company wasn't commenting on speculation about
Volvo's future. But later in the day, he issued a denial that the
automaker was in talks to sell the unit.
"To my knowledge, we are not in negotiations with anyone about the
future of Volvo," Hoyt said.
When Ford last August announced it was exploring the possible sale of
its Aston Martin luxury sports car brand, the automaker left open the
possibility that other Premier Automotive Group brands, including Volvo,
could be sold.
Auto analyst David Cole said if Ford's cash flow problems were desperate
enough, selling Volvo might make some sense.
"You could get cash out of it, which is very important right now," said
Cole, chairman of the Center for Automotive Research in Ann Arbor.
Ford in December finalized a $23.4 billion financing package to fuel its
restructuring and cover expected losses in its automotive operations. It
pledged domestic plants and other automotive assets as collateral.
No bank had been appointed to handle the Volvo transaction, both
newspapers said. The Sunday Times said the deal could be worth $8
billion.
Ford acquired Volvo from Sweden's Volvo AB in 1999 for $6.45 billion.
Last month, Ford said it was reviewing its position on Premier
Automotive Group brands Jaguar and Land Rover, fueling speculation the
company was getting closer to selling the brands.
Ford sold Aston Martin for $848 million in March, with some analysts
saying the brand did not fit into Ford's long-term survival plan. That
plan includes cost savings by developing multiple models worldwide on
the same underpinnings.
The possible sale of Volvo comes as the company is struggling to return
to profitability in the face of fierce competition from Asian automakers
and developing tastes for more fuel-efficient models in its key North
American market. It is slashing thousands of jobs and plans to close
plants to cut costs.
Dearborn, Mich.-based Ford posted a narrower loss of $282 million for
the first quarter. The Premier Automotive Group reported a record pretax
profit of $402 million for the quarter, due largely to Volvo.
And Ford has been relying on Volvo, Cole said, as it tries to globalize
its engineering, design and manufacturing systems.
Cole questioned why Ford would want to spin off Volvo, particularly
because of how much Volvo is part of Ford's design and production
operations. He noted Ford's reborn Taurus debuting for the 2008 model
year is being built on a Volvo platform.
Should Ford decide to sell Volvo, it would need to ensure that the
cooperation continues, Cole said.
"Volvo is really an integral part of Ford," Cole said.
---
AP Auto Writer Tom Krisher and Associated Press Writer David N. Goodman
in Detroit contributed to this report.
By DAVID RUNK Associated Press Writer