Ford sale of luxury brands on fast track

Ford sale of luxury brands on fast track

Bidders now see Jag losses and Land Rover profits

Bryce G. Hoffman / The Detroit News




TRAVERSE CITY -- Negotiations on the sale of Jaguar and Land Rover have switched into high gear as Ford Motor Co. works to finalize a sale of the two British luxury brands by the end of September.

While prospective buyers were initially given scant details about the two enterprises, sources close to the talks told The Detroit News that bidders who made it through the first round are now being provided with detailed information about the brands' finances and operations.

Moreover, Ford is working to make senior executives at Jaguar and Land Rover available to potential buyers -- something the automaker had refused to do before.

Bidders are finding out that Jaguar's deep losses more or less cancel Land Rover's substantial profits. But the financial picture for both brands is looking better.

Ford has confirmed that it is talking with "interested parties," but the Dearborn-based company has not identified who those parties are.

At least one bid was filed by a British private equity group. U.S. private equity firms also have been mentioned as possible bidders, including Cerberus Capital Management LP, which recently acquired a controlling stake in Chrysler; Ripplewood Holdings LLC; and One Equity Partners LLC, the private equity arm of JPMorgan Chase.

The latter is seen as problematic because the man fronting for that firm is Jacques Nasser, the ousted former CEO of Ford who was instrumental in acquiring the two brands in the first place. It would not look good for Ford if the man they fired was able to do a better job running Jaguar and Land Rover after all.

The Times of London reported Monday that Nasser is planning a trip to the United Kingdom in an effort to build support for his bid among labor unions.

Sources say another bid was submitted by India's Tata Motors, reportedly in conjunction with Italy's Fiat SpA. Tata is said only to be interested in Land Rover, which is a popular vehicle with wealthy Indians, while Fiat is only interested in Jaguar.

Ford, however, has made it clear that it does not want to split the two brands, which share much in the way of engineering, manufacturing and parts, so that bid is seen as a long shot at best.

The automaker also has told bidders that they cannot shutter factories, move operations overseas or substantially restructure the two brands.

Garel Rhys, director of the Centre for Automotive Industry at Cardiff University in Wales, said this conservative approach has gone a long way toward mollifying British trade unions and government officials.

"They're handling this in a very circumspect manner," he said. "The unions are now not saying you mustn't sell to venture capitalists. (It's) a complete shift. They were trying to get the government to veto any sale to venture capitalists. They now see this as the only game in town. It's not unlike what happened with the (United Auto Workers) and Chrysler."

Dealers have keen interest

Dealers also are watching events in Britain with keen interest.

Beau Boeckmann, vice president of California's Galpin Motors, the largest Jaguar dealership in the world, said the future of that brand depends largely on who emerges as the winning bidder.

"We definitely have a preference," he told The News during an interview at the annual Management Briefing Seminars in Traverse City.

"There are those we're rooting for and those we're not."

The money from any sale will help Ford's balance sheet as it struggles to restore profits after a $12.6 billion loss last year.

Analyst Jon Rogers of Citigroup said Ford could get $8 billion for Jaguar and Land Rover. He estimated Ford could get another $7 billion for its Swedish Volvo brand, which also may be up for sale.

Ford said last month it is conducting a "strategic review" of Volvo and hopes to make a decision by the end of the year.

Earlier this year, Ford sold its British Aston Martin brand.