may sell all or part of its European Kwik-Fit unit, as well as two U.S. divisions, Collision Team of America, a group of collision repair centers and Greenleaf, a chain of automotive recycling centers, as part of a plan to shed operations that are no longer critical to its business.
said last Friday that it plans to generate $1 billion in cash by parting with noncore assets by the end of the year. The announcement came as part of a major restructuring plan that included 35,000 worldwide job cuts, the closure of five plants and reductions at 11 others, as well as a $4.1 billion charge in the fourth quarter.
The company said it expects to realize "more than $1 billion of cash from these and other potential divestitures" in 2002. If the automaker doesn't meet its goal with the sale of the three units mentioned Tuesday, one analyst expects Ford to continue finding other assets to unload.
"It depends on the market conditions for selling these assets," said Scott Hill, a Sanford Bernstein analyst. "Will there be more divestitures? Absolutely, if this doesn't hit their $1 billion target."
Ford didn't immediately return calls seeking comment. In afternoon trading, Ford was down 32 cents, or 2.1%, to $15.03.
Kwik-Fit is the biggest of three businesses Ford said it is considering selling. Ford paid about 1 billion pounds (about $1.44 billion at current exchange rates) for the operation in 1999. Kwik-Fit has 2,400 service centers and 11,500 employees.
Collision Team operates 32 collision shops in four states and has 850 employees, while Greenleaf operates 31 sites in 14 states and two Canadian provinces, and employs 1,200 people. Ford purchased a minority stake in Collision Team in 1998 and the remaining shares in 2001.
Hill suggested that Ford also has the option of selling part of its auto rental company Hertz. Ford bought the remaining publicly held shares that it didn't already own in Hertz in January 2001 for $710 million, bringing its total stake up to 81.5%. The company could sell part of the stake while maintaining control of the operation, keeping Hertz as a captive buyer for its fleet sales, Hill said. On the other hand, Ford probably wouldn't get as much as it paid because of the state of the economy and the deterioration in tourism and travel.
Other operations that could go would probably be related to powertrains, dynamics and propulsion, which could be sold to outside operators. "These things could be outsourced, but you'd need willing buyers," Hill said. "Otherwise, you're just writing them down."