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Privatizing Ford? Idea gathers steam
August 25, 2006
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
When Bill Ford said in July that "everything" would be on the table as he revised the strategy to turn around ailing Ford Motor Co., the great-grandson of company founder Henry Ford really meant it.
He brought in a special adviser to explore strategic options, which presumably included selling off parts of the company. Bill Ford also has stated that Ford Motor is open to forming an alliance with other automakers.
And now Ford insiders are floating the possibility that the company might even go private -- a move that, while intriguing, would not do much to help the company solve its problems, analysts say.
The options, which board members are expected to finalize at a Sept. 14 meeting, could eventually leave Ford with dramatically fewer employees, plants and brands -- and possibly different leaders and owners.
Ford spokesman Oscar Suris said Thursday he would not comment on "speculation" about the company's plans.
The question of whether Ford would return to private ownership has been a perennial one, and the idea has one apparent benefit: The family could run the business as it sees fit, without bowing to investors' short-term demands that may not be in the company's best long-term interests.
While the notion usually has been dismissed nearly as fast as it surfaces, it has gained steam in some circles now as Ford has struggled to turn itself around over the past four years.
Eyebrows also were raised Aug. 2 after Bill Ford hired personal adviser Kenneth Leet, a mergers and acquisitions specialist who's a veteran of Goldman Sachs and Bank of America. Many saw his hiring as a sign that the company was looking to sell off assets, such as the Jaguar luxury brand or half of Ford Credit.
But others see Leet as the kind of expert who could rally private investors and financial support to buy the company's $14.6 billion in outstanding shares.
Bill Ford repeatedly has been asked about the family's desire to take the company private. And although he hasn't publicly given much credence to that option, even in recent weeks, he also has emphasized that the Ford family will do whatever is necessary to correct the company's course.
"Whether it is private, whether it is public, whether there is some other combination that makes sense," Ford said during a July 20 interview on CNBC, "we have to fix our North American business."
In an interview with Business Week published Wednesday, he added that "whatever is required for the recovery, the family will not stand in the way. All our net worths are tied up in this. The family will not be a limiting factor to any plan that moves us forward."
Some experts back the option of taking Ford private, most notably Gerald Meyers, a professor of management at the University of Michigan and former chairman and chief executive of American Motors.
Others, however, question how a change in ownership would ultimately improve the company's lot.
B. Craig Hutson, an automotive analyst with Gimme Credit, an independent research service on corporate bonds, said taking Ford private wouldn't solve the company's problems. What's more, he said it could leave Ford with even more headaches and debt in the end.
"Every time it comes up, I kind of chuckle," he said. "To buy all of the public shares, you're looking at a lot of additional financing. ... It's pretty far-fetched."
Ford Motor said it is revising its Way Forward restructuring plan, unveiled in January, after the company suffered a bigger-than-expected loss in July and watched sales of the profitable F-Series pickup fall.
The initial plan called for cutting 34,000 jobs and closing 14 plants, among other actions, but the company now says it needs a deeper, faster plan.
The company is considering cutting its 140,000-strong workforce in North America by thousands more, possibly including buyouts to all UAW-represented hourly workers across the United States.
And if Ford Motor is open to selling a brand, such as Jaguar, it may find a buyer. A British construction machinery group, JCB, publicly revealed Thursday that it is interested in buying the British luxury brand.
Contact SARAH A. WEBSTER at 313-222-5394 or
swebster@freepress.com.