Volvo Sale To China: A Tale Of Denial, Enabling, Co-dependency. And India

The story of Ford hawking Volvo to China is getting curiouser and curiouser. That story appeared first in China’s respected National Business Daily. Then, via TTAC, it hit the fan, the wires, and the MSM. The story made the rounds from Forbes to the Chicago Tribune, even the DetNews headlined: “Ford partner in China considering buying Volvo.” Ford’s partner in China is Changan. The codependent joint venture produces Volvo cars for the Chinese markets. Buying the Volvo brand outright would enable Changan to enter the lucrative export market with an established brand at a competitive price point. And now, the denials.

Today, Gasgoo reads the Wall Street Journal Asia. To everybody’s surprise, the WSJA found “a person familiar with the matter.” The familiar person says that Ford and Changan have not talked about a sale of Volvo. WSJA’s deep throat comes up with a rather flimsy story: According to Mr. Mole, Ford execs had met Changan execs simply to inform them “as a courtesy” that Ford was looking for a Volvo buyer. As in “We just happened to be in Chongqing, so we thought, we come by, say hello, and by the way, we are looking for a buyer for Volvo. Know anyone who might be interested?” A search of the WSJ database comes up empty. Strange. It’ll get stranger …

The Financial Times went to the trouble of contacting both Ford and Changan. From Ford, FT received a milquetoast “no comment,” and an even vaguer “it will take some months to assess all of our available options.” From Changan, FT received an equally obscure statement: “This report is not accurate. We are looking for the source of that information now.” Nobody denies the story outright. “Not accurate” can mean anything from a missing semicolon all the way to total bunk. “We are looking for the source of that information now” can mean that when found, the source will get a four week all-paid vacation on Maui. Or a new job as a gas station attendant in Ulumuchi, Inner Mongolia. And if they really want to find the source, they could just call Reuters,

Reuters caught up with the anonymous Changan executive, who had spilled the beans to China’s National Business Daily. To Reuters, the apparently not ultra-secretive executive said that bad, bad Business Daily had “misquoted” him, and that he had no knowledge whatsoever that Changan had ever held discussions with Ford on a Volvo deal: “I told the National Business reporter that there is a chance that Changan might consider cross-border merger and acquisition eventually. It wasn’t meant for the Volvo deal specifically.” Stranger and stranger. All we know is that the executive anonymous doesn’t find pumping gasoline in Ulumuchi very attractive.

Just as the denials from the codependents come in, suddenly, a blip on the radar screen over Mumbai, India. This is where Mahindra & Mahindra is located. Who are these people? Formerly a maker of farm tractors, now a joint venture partner of Renault. Mahindra & Mahindra is considering a joint bid with private-equity firms for Volvo, says the Hindustan Times via AFP. And guess who’s with them: “Mahindras are discussing with private-equity players including Cerberus Capital and Texas Pacific Group to place a joint bid,” the paper says. The paper also says that the Indian vehicle maker is talking to Standard Chartered and Morgan Stanley for advice. JPMorgan Chase has also approached the Indian company for the contract. Let’s not forget, last Sunday, London’s Daily Mail reported that Ford was shopping Volvo to SAIC, also with the assist of JPMorgan Chase. Denials quickly followed.

[Just for the heck of it, let’s assume the India deal happens. Then the Ford guys have one of their courtesy visits to scenic Chongqing, and they say: “As we told you last time, we just sold Volvo. Your new joint venture partner is a farm tractor builder from India.” That would get over real well in China.]

So what’s with the announce and deny pattern?

TTAC has it on good authority that investment bankers have been all over the Asian continent to find buyers for “assets” of Ford and GM. The same circles may be doing some leaking to keep the story hot and fluffy. Multiple bidders raise price and attention. As a partner, Changan definitely makes more sense than a Mahindra & Mahindra who’s partnering with – God forbid – Cerberus. But then, we are assuming that things are supposed to make sense.