Volvo going for $2 Billion USD?
So says Bloomberg:
March 25 (Bloomberg) — Ford Motor Co. may get $1 billion to $2 billion for its Volvo Cars unit, less than a third of what it paid 10 years ago, as it conducts sale talks with more than three bidders, a person familiar with the discussions said.
Shedding the Swedish automaker, the last piece of Ford’s failed strategy to boost profit with European luxury brands, may take six months to complete, said the person, who asked not to be identified because the negotiations are private. The person wouldn’t name the potential buyers.
Battered by a record $14.7 billion loss last year, Ford is trying to raise cash and buttress its balance sheet to remain the only major U.S. automaker not receiving federal aid. General Motors Corp. and Chrysler LLC are operating on $17.4 billion in low-cost U.S. loans.
“Volvo is a valuable property,” said John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Massachusetts. “Ford wouldn’t be selling if it didn’t need the money to shore up its books to get through this mess without putting their hand out to the government.”
Ford confirmed talks with multiple “interested parties” in a statement today that didn’t cite names or a specific number of prospective buyers for Gothenburg, Sweden-based Volvo.
‘More Detail’
Ford, the second-largest U.S. automaker, is “pleased with the numbers and quality” of possible bidders, and “is now talking in more detail,” according to the statement. Spokesman Mark Truby declined to comment beyond the statement.
Ford fell 9 cents, or 3.2 percent, to $2.77 at 4 p.m. in New York Stock Exchange composite trading, extending the shares’ decline in the past year to 54 percent.
The company’s 7.45 percent bonds due in July 2031 slid 0.3 cent to 28.7 cents on the dollar, yielding 26.2 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
Discussions are furthest along with China’s Geely Automobile Holdings Ltd., people familiar with the matter have said. Geely first approached Ford more than a year ago, before the Dearborn, Michigan-based automaker was prepared to sell, the people said. Ford has also approached China’s Chery Automobile Co. and Chongqing Changan Automobile Co., the people said.
From what we hear, Guangzhou have also gotten in on the bidding war. The rumor mill is saying that the bids have already been submitted from the various Chinese parties, and we’re now just waiting for the results which should come in mid April.
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The front runner is Geely bidding $1.2 billion. And Ford has no choice but to take it in order to cut Volvo’s losses from its book. Ford executives must be banging their head against the wall when Chery offered $3 billion for Volvo last summer, before the global financial meltdown began.
One thing I find interesting is how the communist party failed to “traffic control” Chinese companies bidding on Volvo. Multiple Chinese companies bidding on Volvo would drive the price up and conditions favorable to Ford, so I expected the communist party to pre-select the Volvo bidder, but that’s not what I see here.
Heck if Volvo is for $1.2 billion, then the bankrupt Saab may essentially go for free in exchange for a capital injection into it. GM even offered to continue sharing its platforms and parts with the winning Saab bidder for 5 years, which is obviously aimed at Chinese automakers and not Western automakers, who don’t need GM platform and parts.