Ford (F) will look at bids for Jaguar and Land Rover today. According to the FT, "Cerberus Capital Management, Ripplewood Holdings and One Equity Partners are among private equity groups understood to be planning bids.: And, Tata Motors of India may be in the race. There are rumors that Ford may also sell Volvo.

One analyst who has seen the figures on Jaguar and Rover says that the company are worth only $2 billion. Ford is looking for $6 billion to $8 billion. Volvo, which is larger, is almost certainly worth more than that.

Speculation is the Ford wants to sell the units to raise cash for a fund that would allow the Big Three to move health care liabilities into a fund controlled by the UAW. The fund would probably require a contribution of as much as $65 billion according to the New York Times. Ford’s share could be $20 billion. The company has about $48 billion in cash on the balance sheet but needs some of that to cover losses as its tries to fix it North American operations

But, if Ford can get offers for $5 billion for Jaguar and Rover and another $5 billion for Volvo, it may be better off keeping them and using them a collateral for borrowing the money to fund the UAW pool. It would give the car company the chance to improve profits at the car units so that they could contribute to future cash flow.

Ford may be able to use the offers, if they are high, to keep the operations and borrow against them.

In other words, the benefits of hanging on to the businesses could be two-fold.

Douglas A. McIntyre

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