Ford Motor Co. Chief Executive Officer William Clay Ford Jr. called Carlos Ghosn last month to discuss a partnership if Ghosn fails to form an alliance with General Motors Corp., three people familiar with the matter said.
Ghosn, the CEO of Japan's Nissan Motor Co. and France's Renault SA, said he wouldn't talk to Ford until his talks with GM conclude, said the people, who didn't want to be named because the conversation was private. Ghosn and GM Chief Executive Rick Wagoner are scheduled to present a preliminary report on a possible alliance to their respective directors by mid-October.
The July phone call marks at least the third time that Bill Ford, 49, has approached Ghosn. In August 2005, Bill Ford offered Ghosn a top executive position at the company founded by his great grandfather Henry Ford, Bloomberg reported last year.
“It simply means that Ford is desperate, that they're trying to find something that will reverse even temporarily their slide in the market,'' said Eugene Jennings, a business professor emeritus at Michigan State University.
Since last year's call, Ford Motor's condition has deteriorated. The company lost $1.44 billion through the first half of this year, and its U.S. market share is in a 10-year decline. Last week, Ford said it will slash North American production 21 percent in the fourth quarter, in part because of tumbling sales of its profitable F-Series pickup.
Family Ties
Ghosn, 52, rejected Ford's earlier entreaties because he doesn't want to work at a company controlled by its founding family, Bloomberg reported. Ford family members control 40 percent of the company's shareholder votes through Class B shares which they've agreed to sell only to each other. The first offer came in 2002, Bill Ford's first full year as CEO.
Ford spokesman Tom Hoyt declined to comment. Fred Standish, a Nissan spokesman, said he was unaware of a Ford phone call and couldn't comment further. Earlier today, The Wall Street Journal reported Bill Ford's July phone call to Ghosn in a column, citing an unidentified “well-positioned'' person.
Shares of Dearborn, Michigan-based Ford rose 34 cents, or 4.6 percent, to $7.76 at 4:18 p.m. in New York Stock Exchange composite trading, pushing the stock to a 0.6 percent gain for the year.
Ghosn initiated his alliance talks with GM last month at the behest of Kirk Kerkorian, the Las Vegas billionaire who since last year has bought up 9.9 percent of the Detroit automaker's shares.
Ford officials regard a three-way alliance involving cross- shareholdings among GM, Renault and Nissan as unlikely to occur, one of the persons familiar with the situation said. Ghosn angered Wagoner, 53, and other GM officials by meeting to discuss it with Kerkorian and his adviser Jerome York, who serves as a GM director, before alerting management, the person said.
Less Pressure
In addition, GM's $1.2 billion second-quarter profit on its primary business of making and financing automobiles was three times analysts' estimates. That reduced pressure on Wagoner to make big strategic changes, the person familiar with Ford's thinking said. GM reported a $3.4 billion net loss for the quarter after paying for buyouts and early retirements for factory workers.
Also, Ghosn's July 27 statement that he wouldn't proceed with an alliance unless he believed gains for his companies would be 10 times greater than the risk was interpreted at Ford as a sign of Ghosn's reluctance, the person said.
`In Distress'
Ford's “critical products — primarily SUVs and trucks — are in distress with little hope for near-term relief,'' Kip Penniman, an analyst with Montpelier, Vermont-based KDP Investment Advisors wrote in a note today.
“At present, we believe it's premature to factor in any significant asset sales at Ford,'' Penniman said, who reiterated his “sell'' rating on the company's debt today.
Ford's hiring of an adviser, Kenneth Leet, will involve a review of the future of Ford's assets and brands, including the Jaguar luxury-car unit, a person familiar with the plan said after the Aug. 2 announcement.
“While the future sale of Jaguar may generate positive headlines, we think any benefit to the bonds would be short lived,'' Penniman said in his note.
Ford's 7.45 percent note due July 2031 rose half a cent to 76.25 cents on the dollar, yielding 10.1 percent, according to Trace, the NASD's bond-price reporting service.
Ford will offer no-interest loans of as long as six years and ease credit standards beginning tomorrow to clear out 2006 cars and trucks as next year's models begin to arrive.
