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Jaguar, Land Rover For Sale?


 

 

Ford Motor Co. is remaining mum, but reports that it has quietly put both the Land Rover and Jaguar brands on the market are ringing true.

Tom Hoyt, Ford spokesman, declined to comment on the reports Jaguar was finally getting dumped. “We don’t comment on speculation,” he said. “If there is something to announce, we’ll announce it,” he said.

Outside observers note Ford basically needs every dime it can muster now to salvage its core North American automotive business, and long-quiet members of the Ford family are beginning to wonder if the Ford fortune could survive longer if the family trusts finally let go of their Ford stock.

 

Strategic reviews produced both inside the company and by outside consultants, have consistently recommended the sale of Jaguar and Land Rover ever since 9/11. The practical business case for keeping Jaguar simply no longer exists, outside analysts have suggested.

The Ford family’s three nominal car guys — Edsel Ford II, William Clay Ford Sr., and William Clay Ford Jr. — have opposed the idea even though Jaguar has brought the company nothing but grief for nearly two decades.

In the case of Land Rover, former Ford CEO Jac Nasser simply paid way too much in the late 1990s when he forked over $3.3 billion to BMW for the brand and negligible physical assets.

Hinting at a sale

 

Bill Ford Jr., the automaker’s executive chairman, recently gave his version of Dieter Zetsche’s “all options are being considered” in a recent magazine interview.

The most Ford could get for both Jaguar and Land Rover is about $1.3 billion, according to an estimate prepared last winter by John Murphy, the automotive analyst at Merrill Lynch.

Land Rover has never produced the kind of spectacular losses long attributed to Jaguar but Land Rover has required periodic subsidies from the mothership, which can longer afford to pick up the tab. On a fully-accounted basis, it’s doubtful Ford has ever made one thin dime from the Land Rover investment.

Nevertheless, the private equity guys in North America, Europe, and theMiddle East seem to have developed a taste for automotive companies in the past few months. Thus, there is more than enough cash around to justify the sale of Jaguar-Land Rover.

The Ford family’s car guys also are being forced to adjust to the new realities and have agreed to start selling off pieces of the Premier Automotive Group, which once upon a time was supposed to be producing half the company’s profits by now.

Ford agreed to a definitive agreement to sell Aston Martin, its prestigious sports car business, to a consortium comprised of David Richards, John Sinders, Investment Dar, and Adeem Investment Co. The transaction is now expected to close by the end of June and net Ford $925 million. As part of the transaction, Ford will keep a 15-percent stake in Aston Martin. Other terms and conditions specific to the sale were not disclosed.

"The sale of Aston Martin supports the key objectives of the company, to restructure to operate profitably at lower volumes and changed model mix and to speed the development of new products," Alan Mulally, Ford's President and chief executive officer, said when the deal was announced back in March.

"From Aston Martin's point of view, the sale will provide access to additional capital, which will allow Aston Martin to continue the growth it has experienced under Ford's stewardship,” he said.

Merrill Lynch’s Murphy said the high multiple awarded Aston indicated the other PAG brands could be sources of liquidity for Ford, although the company's repeated commentary indicates they are not for sale.

 

A sale of Volvo could net about $8 billion but the Ford family is probably holding it in reserve for now, either as a bargaining chip to take the limp remains of the once mighty British auto industry off their hands or as a hedge against a real disaster somewhere down the road.

 


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