Ford has world class management now, at least according to the company. It has a better deal with the UAW, which improves its balance sheet and will sharply improve its cost base in North America. Its last quarter financials show the company doing extremely well in Europe and South America. Over the last month, Ford’s shares have out-performed GM’s (GM) by a very large margin.
But, it looks like Ford may have found a buyer for Jaguar and Rover. India conglomerate Mahindra & Mahindra will team up with private equity operation Apollo to make an offer.
If Ford can manage operations as spread out as Europe, South America, and Asia, why can’t it fix its two luxury car units? And, why does a company in India think it can do a much better job than Ford can?
According to The Wall Street Journal, "Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000." Today, the No.2 US car company might get $1.5 billion for both of them together. If Ford improves the fortunes of the two companies, it might add the $4 billion in value back. For a company with a market cap of $15 billion, that is worth about $2 a share on a $7.25 stock price.
No guts, no glory.
Douglas A. McIntyre
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