According to The Sunday Telegraph, FoMoCo is making it easier for bidders intent on relieving the automaker of the remaining British pieces of their PAG (Premium Automotive Group). In an "unprecedented move," Ford has decided that potential buyers do not have to submit fully-financed bids for the second round. The change reflects the tightening of the international credit market; a trend that raised the cost of Cerberus' Chrysler takeover and delayed the recent sale of GM's Allison Transmissions unit. The lowered bar is a big boost to bids by two (count 'em two) ex-Jag CEOs (Sir Nick Scheele and Bob Dover), former Ford CEO Jac Nasser and Chrysler-owning Cerberus; all of whom are playing this game with OPM (Other People's Money). Indian automakers Tata Motors and Mahindra & Mahindra, however, are bound to be pissed at FoMoCo's newly leveled playing field.
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“Other Peoples’ Money”
Great movie! One of Danny DeVito’s best roles ever.
Quite frankly, I hope Scheele and Dover get it, for no other reason than the “Sir” at the beginning of Sir Nick Scheele’s name.
Ford would be stupid to put these into the hands of Tata or M&M. The last thing Ford’s truck business needs in the US or Europe is to hand one of these Indian companies a ready made distribution network and a team of experienced engineers and marketers.
Much better to put these brands into the hands of someone who simply wants to make money selling luxury vehicles. Ford hardly plays in the Jaguar and Land Rover markets with it’s other brands.
“Please! We screwed them up so badly we’ll do anything to get rid of these brands!”
Ford is much more likely to be able to have profitable relations with the old CEO players rather than the Indians who will likely shake hands and never call back after the deal. I bet that’s what this is all about.
If this brings more money in for Ford then its a good move, but if it is mere game playing to screw over the Indian companies then its a perfect example of why Ford is going under. If you are selling something because you need to raise cash then sell it to the highest bidder period.
Sherman Lin:
If this brings more money in for Ford then its a good move, but if it is mere game playing to screw over the Indian companies then its a perfect example of why Ford is going under. If you are selling something because you need to raise cash then sell it to the highest bidder period.
But aren’t Ford hoping to keep 20% ? If so, then it’s in their best interest for Jag & Landie to keep selling high priced cars (with Fords engines) rather than a mass of low priced crates with a posh badge on the nose (which would erode the nameplates until they were worthless).
Ford the final time: This is not about money. Ford had $37.4 billion in cash at the end of Q2 with lower expected costs of restructuring ($15-16 billion through 2009 – not including the potential positive cash flow in 2009). What they need now is fewer distractions from revamping Ford and fewer liabilities to be concerned about while revamping.
Ford, I believe, is trying to set up Jag/LR much like they have a relationship with Mazda. Mazda and Ford share lots of development and technology, but Mazda reports separate earnings and can survive independently of Ford if need be (although, if Ford went bankrupt, Mazda would be in a world of hurt from a product development standpoint). This is a great operating approach that keeps Ford resources open to Jag/LR and Jag/LR resources open to Ford. This is a perfect of example of how Ford is finally getting it.
With Jag and LR finally hitting stride, quality rising quickly – at least at Jag – and product development and engineering processes aligned, spinning the two off as a separate company makes good sense from an operational perspective. If Ford were to sell to Tata, Tata may try to micro-manage the brands, move production offshore, do any number of things that Ford has learned hurts the brands and affects any stake they have and their ability to cooperate withe Jag and LR.
I think this move just cements the fact that Ford wants a PE group and not and automobile company to buy a controlling stake in Jag/LR. I really hope that Dover or Scheele get it because I think the future potential of the brands under either of those two is sound with the engineering, manufacturing and product development resources they can and will successfully share with Ford.
I just think that too much game playing as been going on at Ford and GM etc. Everyone assumes that the Indian wil ruin Jaguar or make crap. I think Detroit has been making dangerous assumptions for too long. If you need or want a long term relationship with Jaguar themn make it a condition of the sale.
Another way of looking at it is the guys who use to run Jaguar and failed want another chance to run it and yet somehow many on this forum assume that they would be a better choice than people who have buil a hugely succssful auto empire?
On one hand, you can place that as a condition in your sale, but the buyer doesn’t have to uphold it, even if you are a stakeholder.
More importantly, though, Ford risks buyer and political backlash in its largest Euro market if this deal does not go off well. Selling to an auto firm is risky from a political perspective especially if they are international and relatively unknown. If a PE firm buys Jag/LR, Ford will have more pull because of the engineering resouces that will have to be shared and the fact that these firms will re-establish the brands as UK brands as an independent entity (even though several of the bidding PE firms are from the U.S.).
I think Ford knows exactly what it is doing. The only reason everyone thinks there is game playing going on in this deal is that no one has the full story and every week someone reports something different and more sensational than last week. None of the assumptions Ford is making in this deal are dangerous. What would be more dangerous is to ignore the politics involved in this sale and just dump it with the highest bidder.
Ford needs to shed more of these distracting brands and become more focused on saving what market share they have left.
If, Ford does go under inwhich I don’t believe they ever will.
Mazda would never go under, the Japanese govt. would never allow it.
The Big T or Big H would step in to save them.
…a mass of low priced crates with a posh badge on the nose (which would erode the nameplates until they were worthless).
Why does everyone assume the Indians are going to do the same thing Ford did to Jag. I think both companies could use some new ideas and not the same old rehashed management mess.