Family might take Ford private: report

TrainTrac · Sep 5, 2006

Not sure if this was already posted/discussed here. Looks like they're looking at any possible way to turn the company around.

Family might take Ford private: report

By Shawn Langlois & Padraic Cassidy, MarketWatch

Last Update: 4:33 PM ET Aug 24, 2006

NEW YORK (MarketWatch) - The Fords are reportedly mulling the possibility of bringing their company back into the family fold, which would end 50 years on the stock exchange and pave the way for Bill Ford and his inner circle to retool the struggling automaker without further meddling by shareholders.

At this point, the family, which owns about 5% of the company's outstanding shares and controls 40% through a separate class of stock, is "willing to look at anything," according to USA Today citing an unnamed source.

Closing Ford's doors to Wall Street would allow management to focus on their own long-term objectives without having to constantly feed analysts and investors quarterly progress reports and jump through the other regulatory hoops that face public companies.

Such a move would presumably cost about $13.7 billion, or 95% of the company's market capitalization of $14.4 billion. A spokesman for Ford declined to comment on what he called "more speculation."

"The Ford family is living in a cosseted environment much like the royal families of Europe 100 years ago."

â€” Peter Morici, professor at the University of Maryland

Ford's stock, which was one of the hottest offerings in corporate America's history when it debuted in 1956, gave up its early gains to finish Thursday's trading flat at $7.76.

Shares have jumped about 30% in the past month but are still a fraction of their $37.30 peak notched in 1999.

David Cole, chairman for the Center for Automotive Research, said that while Ford returning to being a private company could happen in theory, actually pulling it off is a different story.

"Ford's assets are cheap but the overhang from such areas as contracted health care for hourly workers would be a challenge," he said.

Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business, said he doubts going private would solve Ford's fundamental problems.

"The labor cost and stale product issues would remain and going private could actually hasten the demise of Ford if it removed market pressures to deal with these issues," Morici said. "The Ford family is living in a cosseted environment much like the royal families of Europe 100 years ago."

Plunging sales, particularly among trucks and SUVs, has Ford tinkering with its "Way Forward" plan, which was laid out in January with the intention of slashing up to 30,000 jobs and closing 14 North American factories by 2012.

An update, expected to follow a board meeting on Sept. 14, could include white-collar cuts and more plant closures.

In the meantime, Ford slashed its fourth-quarter production plans by a surprising 21% in response to the flagging U.S. sales.

And Ford is looking to clear out inventory by launching a 72-month, zero-percent-financing promotion to run through Labor Day. See full story.

Ford shares also got a boost this week on reports that the auto pioneer reached out to Renault-Nissan about a potential alliance should the partnership's current discussions with General Motors come up empty.

Shawn Langlois is a reporter for MarketWatch, and the editor of its community message boards.

Padraic Cassidy is a reporter for MarketWatch in New York.

Todd Z · Sep 5, 2006

I think there is a link on the Home page of this site....

Good reading...

Todd Z

Thomas Clark · Sep 5, 2006

I don't think they can quite leverage it, and Bill is stepping down, not to mention by law you cannot force share holders to sell (most of the time). (Please Lord, don't let the French in, please)