Global News: Volvo Cars Has Poor Resale Value; GM Guarantees Technology for Saab; Porsche Secures $13.5 Billion Loan
March 26, 2009
In Global News Wednesday, Ford Motor Co. is negotiating with three bidders for Volvo, General Motors and Saab agree to share technology for five years, and Porsche obtained $13.5 billion in financing.
Swedish luxury vehicle maker Volvo Cars has potentially lost more than two-thirds of its
company resale value as Ford negotiates with three bidders on its sale, Bloomberg News
reports. Ford is haggling for $1 billion to $2 billion during private negotiations, only a decade after purchasing Volvo for $6.4 billion. Volvo's pre-tax loss was $1.7 billion last year. Shedding Volvo is a key step to Ford's "One Ford" initiative, bringing the company's focus back to a portfolio of domestic brands.
GM launched a new incentive on Saab, guaranteeing technology sharing for the next five years. The arrangement intends to make Sweden's other American stepchild more desirable to suitors, and to earn favor with Swedish lawmakers as they consider fiscal aid. The agreement gives Saab license to GM's global platforms, components and other systems; GM gets Saab's safety, chassis and engine technology. Saab has filed in Swedish courts for protection from its creditors while it restructures, a mechanism similar to Chapter 11 in the U.S.
In Germany, Porsche obtained a $13.5 billion for the purchase of Volkswagen. The massive loan was needed to refinance debt used to buy Volkswagen AG stock. Porsche has acquired 74.1 percent of VW, with plans to increase that stake to at least 75 percent this year, the minimum required by German law for full control of the company. The extended stake will secure relations with Porsche's largest supplier and transfer Volkswagen's cash flow into Porsche's books.
AutoObserver's Global News report is compiled by Edmunds.com Senior Manager David Greene.
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