Print

Email story

Comment

Email editor

Ford's tough spot: Go private?

It's just one idea that could be on the table for the No. 3 automaker as it tries to end its recent losing streak.

By KRIS HUNDLEY
Published August 25, 2006

	Dump CEO Bill Ford Jr., says a local shareholder.

Ford Motor Co. is considering going private as it tries to revive flagging sales, according to unconfirmed reports Thursday.

Whether the No. 3 automaker is willing to spend $13-billion to get out of the public limelight isn't clear. But a few loyal shareholders in the Tampa Bay area had other suggestions about how Ford, which lost $1.4-billion in the first half of the year, could maneuver a turnaround.

- Dump chief executive Bill Ford Jr., said Arlene Hansen, a Palmetto resident who worked at Ford headquarters in Dearborn, Mich., until being downsized out of a job four years ago.

- Get rid of the clunky designs and give buyers some "eye candy," said Pearlyne Wilson, a Tampa retiree whose husband was a Ford plant manager.

- Do a better job of marketing the cars' quality and durability, said Lawrence Stellato, a Spring Hill retiree who has driven Fords since 1971 and whose son-in-law is a Ford engineer.

Stellato, who currently owns 3,000 shares of Ford, which he bought at an average of about $20 a share, figures there's little chance he, or most longtime shareholders, would benefit by Ford's privatization. The company's stock, which has traded between $6.06 and $10.20 over the past 52 weeks, closed Thursday unchanged at $7.76.

Though any buyout would occur at a premium to current price, that still wouldn't be enough to bail out investors like Stellato, Hansen or Wilson, who have emotional, as well as financial, ties to the company.

"If I could get for it what we paid for it and it would assist the company, Ford going private wouldn't bother me," said Wilson, who has owned Ford stock for more than 30 years. "But my average price is about $35 a share, so let's not even talk about it."

But Wilson, who gets health benefits and a small pension from Ford, is clear about one thing: Privatization would be better than bankruptcy.

Ford declined to comment on the speculation about going private, first reported by USA Today. "The family is willing to look at anything," said the newspaper's unidentified source, who was said to have direct knowledge of the discussions.

Ford Motor was founded by Henry Ford and 11 investors with $28,000 in capital in 1903. The company's namesake bought out his partners in 1919, and the automaker was family-owned until going public in 1956. The Ford family owns about 5 percent of Ford's outstanding shares. However, through a separate class of stock, the family controls 40 percent of the company.

Earlier in August, Ford said it hired mergers and acquisitions expert Kenneth Leet as an adviser to explore strategic alternatives. The company has not gained U.S. market share since 1995, and in July, Toyota Motor Corp. outsold Ford for the first time.

Ford has said it will accelerate its turnaround plan, dubbed the "Way Forward," to respond to weakening U.S. demand for fuel-hungry trucks and SUVs amid high gasoline prices.

Ford also said last week it would cut fourth-quarter production to its lowest level in 25 years. Other options being considered include selling off brands such as Jaguar, forming partnerships with other automakers, slashing its work force and closing more plants.

By going private, Ford would no longer have to answer to analysts and shareholders. The move could mean substantial profit for the Ford family if their efforts were successful and the company returned to the public market after sales rebounded. It would cost the family about $13-billion to take the firm private, based on its current market capitalization.

"I think that speculation about privatization exists because it's possible," Argus Research analyst Kevin Tynan said. "And with where the market is right now, private equity could come in and snap Ford up pretty quickly. But would it do Ford any good? I don't think so."

Peter Morici, a professor of business studies at the University of Maryland, said going private would not solve Ford's fundamental problems.

"The labor cost and stale product issues would remain," he said. "Unless and until Ford and GM address their labor cost issues, I hold little hope for Ford. GM may not be inclined because it is in better shape than Ford. It can let Ford be the camper the bear catches as it scampers away to safety."

Information from Times wires was used in this report. Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified August 24, 2006, 22:50:40]