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Ford to Slow Volvo Unit Sale to Ratchet Up Competition

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[source: Wall Street Journal]

Ford to Slow Volvo Unit Sale to Ratchet Up Competition

By NORIHIKO SHIROUZU

BEIJING -- Ford Motor Co. has slowed the bidding process for its Volvo unit in an effort to get a better price for the Swedish car brand, according to a person close to the U.S. company.

The knowledgeable person said Ford has decided to wait for General Motors Co. to wrap up its sale of Adam Opel GmbH unit, and is hoping to invite a loser in that two-way bidding race to bid for Volvo.

"Expect nothing to happen for another three to four weeks" as Ford waits for GM to finalize an Opel buyer, said the person, who declined to be named.

The person said there are currently three players bidding for Volvo, including a group led by China's Geely Holding Group Co., as well as Beijing Automotive Industry Holding Co. and a Europe-based group of investors, which the person wouldn't identify. Those three possible buyers were supposed to submit final bids for Volvo in mid-July, and Ford had intended to choose a buyer relatively quickly.

But Beijing Auto, which also had been bidding for Opel and its British sister brand Vauxhall, dropped out of that race earlier this month because of issues involving intellectual property rights. That development prompted Ford to alter its schedule for the Volvo sale, the person said.

A group led by Canadian auto-parts supplier Magna International Inc. is now competing for a majority stake in Opel with private-equity firm RHJ International SA, a Brussels-based company linked to U.S. buyout group Ripplewood Holdings LLC. Magna's bid is backed by Russia's Sberbank Rossia and auto maker OAO GAZ Group.

The person close to Ford said the American auto maker decided to slow the bidding process to ratchet up competition and try to get "the best possible price" for Volvo.

The person said Ford expects Beijing Auto to go after Volvo more aggressively now that it failed to acquire a majority stake in Opel. The Dearborn, Mich. auto maker also wants Magna or RHJ -- whichever fails to buy Opel -- to also take part in the bidding process for Volvo, the person added.

Ford is "looking for the best buyer and most socially acceptable buyer possible for Volvo," the person said.

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