were up nearly 3% Wednesday following a report that the Ford family is loosening its grip on the struggling automaker as the company mulls a sale of its upscale British brands.
The Wall Street Journal
quoted an unnamed source close to the family members as saying, "Of the $500 million or so in Ford stock held by the family, about $300 million of it wants to stay until the end. The rest would prefer to get out, get their money while they can, because they aren't sure it can be fixed."
The Fords own less than 5% of the company's equity, but they control 40% of its voting power through a dual-class share structure. The
's report is just the latest to indicate that the family is wavering in its stake after the company cut its dividend payments last fall.
Now Ford is considering the sale of more assets to raise cash. The company confirmed Tuesday that it
hired financial advisers to explore options for the Jaguar and Land Rover brands.
Ford sold its Aston Martin brand for $848 million in March, and talks surrounding the sale of more assets from its stable of upscale brands, Premier Auto Group, signal a focus on mass market products.
Morgan Stanley analyst Jonathan Steinmetz said in a note to clients Wednesday that Jaguar has been a "large cash drain" on Ford as it attempts to restructure.
"We see many uses of capital that could earn a higher return than Jaguar/Land Rover under Ford's stewardship," said Steinmetz. "Ford does not have the resources from both a financial and managerial standpoint to keep plowing time and money into all its brands."
Having taken a number of steps to shore up its cash position recently, Ford doesn't have an immediate need for more liquidity. In its current predicament, however, every bit helps.
The company's market share in North America is around 10%, and its first-quarter sales fell in that key region by 8% to $18.2 billion. Ford is aiming to achieve profitability in North America by 2009, with market share in a range from 10.5% to 11%.
Steinmetz said Ford can use more cash for funding its restructuring, reining in its health care and pension liabilities, investing in new product development, buying out dealers, increasing its stake in Mazda or paying down debt.
He estimated that a sale of Jaguar and Land Rover could be worth anywhere from $4 billion to $7 billion.
Ford's troubles come against a backdrop of tough competition from lower-cost foreign-based manufacturers such as
. Furthermore, auto sales in North America are languishing across the board amid high gas prices and rising interest rates.
Shares of Ford recently were up 23 cents to $8.55.