The rumored price tag of about $8 billion might be within the financial reach of Volvo AB
Now, that calls into question why Volvo sold its personal car segment to begin with, if it was to buy the whole thing back again. Ford could certainly use the money, though Volvo and its luxury brand has become a last bastion of growth within the troubled Detroit giant. But there's very little synergy to be expected between heavy trucks and luxury cars -- no shared parts, not much of a shared brand, no reason to make a deal.
On its own, that is. A couple of factors make the Volvo/Volvo pairing more attractive. For one, the largest shareholder in Volvo AB is French truck and car maven Renault. The then-former Ford assets might make a good fit within that operation, and with its Japanese ally --Motley Fool Global Gains recommendation Nissan
Another possible buyer could be one of the Chinese or Russian automakers -- flush with cash and opportunity, but short on technical expertise and great designs. If that were to happen, the Volvo brand might lose value as it becomes associated with cheaply made off-brand products, and that would definitely hurt the Swedish truckmaker. So then a return to the fold would be a purely defensive move.
All of this is speculation at this point, and Ford may well decide to keep Volvo close to the vest. The company may not be denying that Volvo could be had for a price, but still says that no negotiations are happening yet. But it's a fascinating glimpse of the complex factors that go into a multinational acquisition of this sort, and this is a big deal just waiting to happen.
For further Foolishness:
- Foolish Forecast: How Safe Is Volvo?
- Get Ready for the Fall?
- The Best International Stock for 2007 Revisited
Fool contributor Anders Bylund owns shares of Nissan and Volvo, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will keep you truckin'.
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