A U.S.-led group – the Crown consortium – has revealed its interest to acquire the ailing Volvo unit from Ford Motor Co. (F). The group included former Ford director Michael Dingman and former Ford and Chrysler executive Shamel Rushwin.

In 1999, Ford had acquired the Volvo Car Corporation from Sweden-based Volvo Group for $6.45 billion. However, the company put up the unit for sale in December last year in an effort to cut costs and raise cash amidst plunging industry-wide auto sales.

Ford had discussions with many automakers for the sale, including Renault SA and China’s third-largest automaker, Dongfeng Motor Group. So far, China’s Geely Automotive has submitted the only concrete bid for the unit. Media reports have disclosed that Geely has valued the unit at around $2 billion.

Rumors had spread that Crown consortium had offered significantly less than Geely, but both plans involved more than $3 billion of additional investment in Volvo. It has been reported that the consortium had fully secured financing from U.S. private equity groups and is seeking additional backing from Swedish investors to acquire Volvo.

Volvo is the last brand left with Ford for disposal. The automaker has been divesting brands to focus on Ford, Mercury and Lincoln and conserving cash to support a turnaround.

In 2007, Ford sold its Aston Martin brand to a U.K.-led group for $925 million as a part of its turnaround plan. In the first half of 2008, Ford sold its U.K.-based Jaguar and Land Rover to the Indian auto giant Tata Motors. The company sold the unit for $2.3 billion, about half the price it had purchased from BMW in 2000.

In the latter half of 2008, Ford shrugged off its 20% stake in the Japanese automaker, Mazda Motor, for $540.3 million. The company reduced its stake to 13.4% in Mazda, which it rescued from bankruptcy in 1979.

We continue to recommend the shares of Ford as Neutral with a target price of $8.
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