I'm a little confused by this announcement. What exactly is a preferred bidder? What is it about the bidder that would lead Ford to approve Geely over another?
Correct me if I'm wrong, but when you're trying to unload a money-losing asset while taking as small a loss as possible, wouldn't you be more focused on the bid than the bidder?
If I were a Ford shareholder (and I probably am through mutual funds), that's where my concern would lie.
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Is the "preferred bidder" verbiage part of Ford's final efforts to get the best out the deal?
ReplyDeleteThat might mean a bit more cash or (if some of the press is to be believed) something that will make Ford feel more comfortable on further safeguards on the IP side for Volvo "shared platform" design blueprints.
To me, it sounds like they are saying "we like you best, but you need to do a little more."
Still, I take your point, and it is a high-risk game - especially if it leads to only one bid remaining. By definition he then becomes the preferred one.
I don't know if there are other potential buyers in the frame.
I think it makes Geely feel good, and it gives them yet another reason to make a press release. As long as the ball stays in the air, Geely has hopes of catching it.
ReplyDeleteAnd I agree with you, I think it gives Ford a way of telling Geely they're getting closer.
Then again, it only makes sense to me that Ford would prefer whichever bidder comes up with the highest bid. If they loved Volvo, they'd keep it. Since they're willing to part with it, I'm thinking they want to book the smallest loss possible.
According to the Bloomberg story I linked above, there's at least one other group of investors who still think they have a shot at a viable bid, so Ford does have a choice if it wants one.
Someone else pointed out to me earlier today that Magna was identified as the "preferred bidder" for Opel early this year, but that particular deal has yet to be consummated. So I'm not sure whether it really means anything at all.
What about the speculation that Ford doesn't want to sell Volvo without IP "guarantees"? That might make them take a lower bid, if they think that they can maintain some kind of product advantage and protect share for a little while longer as a result.
ReplyDeleteI know little about this area, but I have read that Volvo sits on a 'shared' design platform with other Ford models. So if they sell Volvo they are providing a window on Ford technology in general?
I've seen the "shared" platform mentioned too. Not being an engineer, I'm not certain as to how difficult it would be to separate Ford and Volvo without doing some damage, but my guess, like yours I think, is that it wouldn't be easy.
ReplyDeleteAnd here's another guess... Maybe Ford coughed up the "preferred bidder" moniker in exchange for a concession from Geely on IP. Just a guess, though. :-)