Ford Edges Closer to Volvo Sale

Ford appears to be ready to put the last of its Premier Automotive Group brands on the block, with Swedish subsidiary Volvo Car expected to fetch as much as $8 billion.

A report in the Sunday Times in the U.K. that Ford is preparing to sell Volvo triggered a global media feeding frenzy, including at least one official response from the U.S. automaker that it was not yet conducting negotiations with prospective suitors.

The potential spinoff of Volvo follows the sale earlier this year of Aston Martin to a group of private-equity investors and more recent discussions with bidders for British brands Jaguar and Land Rover, which Ford appears to be packaging together for a sale.

Among the companies said to be interested in pursuing Volvo are BMW and Renault.

Volvo, like Land Rover, is profitable, earning several hundred million dollars for its parent last year, according to European analysts.

But one stumbling block could be the significant integration of Volvo's product lines and R&D activities into Ford's corporate system. Virtually all Volvo vehicles now share components extensively with Ford models in Europe and North America.

Further, Volvo is among the assets that Ford pledged last year as collateral in securing a $23 billion revolving credit line intended to provide the Blue Oval with sufficient working capital to weather its ongoing financial crisis.

Ford bought Volvo Car in 1999 for $6.5 billion from Swedish truckmaker AB Volvo.

The sale of Jaguar and Land Rover is expected to bring up to $2 billion, analysts estimate. Initial bids are due this week.