IE 11 is not supported. For an optimal experience visit our site on another browser.

Ford reviewing operations like Jaguar

Ford Motor Co. is launching a strategic review of operations such as the Jaguar brand, that may lead to asset sales or alliances with other companies, the Wall Street Journal reported on Wednesday, citing people familiar with the situation.
/ Source: Reuters

Ford Motor Co. is launching a strategic review of operations such as the Jaguar brand, that may lead to asset sales or alliances with other companies, the Wall Street Journal reported on Wednesday, citing people familiar with the situation.

Kenneth Leet, who led mergers and acquisitions teams at Goldman Sachs Group Inc. and Bank of America Corp. , will spearhead the effort for Ford, the report said.

Leet is reporting to Ford Chairman and Chief Executive Bill Ford, who is under pressure from the automaker’s board to take more dramatic steps in his restructuring efforts, the report said.

An announcement about Leet is expected later Wednesday, the paper reported.

“We have nothing to announce at the moment,” Ford spokesman Tom Hoyt said.

“We’d see such an announcement as a public admission of just how bad Ford’s operations have become,” Goldman Sachs analyst Robert Barry said. “Ford has been under pressure to take more drastic actions given its crosstown rival has been announcing big cost cuts and asset sales.”

Last month, Ford, which has been working to slash costs and stem market-share losses, reported an unexpected second-quarter loss of $123 million.

Ford started a restructuring program six months ago that include closing 14 plants and cutting up to 30,000 factory jobs in North America to return the region to profits.

Ford is facing challenges overseas as well, particularly in its money-losing British luxury car unit Jaguar. Jaguar was bought 1989 and Ford has struggled to make money on the brand.

In an interview with Reuters on July 20, CEO Bill Ford said Jaguar will take time to turn around, but he was considering all options for the brand.

“I am not patient,” he said. “Nothing is off the table in terms of any of our entities.”

Ford had said earlier that he was open to alliances with other automakers, but was not in talks with any companies currently.

But Goldman Sachs’ Barry said in a note to clients that closing or selling money-losing Jaguar would likely be difficult, but positive.

“Hiring an adviser to conduct a strategic review is not needed to see that,” he added.

Last month, crosstown rival General Motors Corp. said it was considering a three-way alliance with Nissan Motor Coand Renault SA .

GM also plans to sell 51 percent of its finance arm, General Motors Acceptance Corp. finance unit, to a group headed by Cerberus Capital Management.

Investors have long speculated that Ford may also spin off its finance arm Ford Credit, which has seen borrowing costs rise after its debt ratings were cut to junk status.

But Ford has so far maintained that he has no plans to sell Ford Credit.

Ford Credit is “a very core asset and we intend to hold onto it,” Ford Chief Financial Officer Don Leclair said on a conference call on July 20, following the company’s second-quarter loss.

Leet, who resigned in April as head of investment banking in Europe for Bank of America Corp., is a mergers and acquisition expert. He joined the bank after spending 18 years at Goldman Sachs where he was responsible for the firm’s investment banking activities with industrial companies.

In 2003, Leet — who graduated from Brown University and received a master of business administration degree from Harvard — was offered the position of undersecretary of domestic finance at the U.S. Treasury Department. But he withdrew from consideration that October, citing health reasons.