Ford is preparing to sell Volvo, which worth as much as $8 billion according to a Merrill Lynch estimate, as it divests its Premier Auto Group's [PAG] assets, according to a report in the Sunday Times of London. A Ford spokesman said the company is not in discussions with any bidders. "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," the spokesman commented. Ford paid $6.5b for Volvo in 1999. Analysts believe possible interested parties include BMW, Renault, Hyundai and private equity groups. Although PAG is unprofitable, analysts estimate Volvo earns $800m-$1b annually. However, U.S. sales have declined over the past year and a half, according to Autodata. Two issues making a Volvo sale unlikely are its inclusion as collateral in a $23b loan Ford took out last year, and Ford's reliance on Volvo for global engineering, design and manufacturing systems, according to David Cole, chairman of the Center for Automotive Research. Separately, bids for Land Rover and Jaguar, also of PAG, are due Thursday.
Sources: The Times [London] I, II, Associated Press, New York Times, Wall Street Journal
Commentary: GM, Ford Confuse Investors With The Turnaround Dance • Ford's Inventory Mix: What the Heck is a 'Crossover' Vehicle? • Ford Considering Jaguar Sale: Any Takers?
Stocks/ETFs to watch: Ford Motor Company (NYSE:F). Competitors: General Motors Corp. (NYSE:GM), DaimlerChrysler AG (DCX), Toyota Motor Corp. (NYSE:TM), Nissan Motor Co., Ltd. (OTCPK:NSANY), Honda Motor Co., Ltd. (NYSE:HMC). ETFs: PowerShares FTSE RAFI Consumer Goods (PRFG), Rydex S&P 500 Pure Value (NYSEARCA:RPV)
Earnings call transcripts: Ford Motor Q1 2007
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