Okay, maybe my math isn't perfect, but this match of a prized brand to an upcoming carmaker makes more sense:
Ford lost about $4.65B on Volvo, which they can amortize over several years to net out the tax liability on their current income. Still, Ford's income tax expense last year was only $69mm, so it would take over 67 years to net the whole thing out at present earnings. Given that Ford can't hope for much growth in a mature car market like the U.S., the tax loss benefits of this debacle are really very tiny.
Geely comes out a big winner by grabbing a globally recognized brand for a song.
Nota bene: Anthony J. Alfidi has no position in the above-mentioned stocks at the time this post was published.
Zhejiang Geely Holding Group signed a binding deal Sunday to buy Ford Motor Co.'s Volvo Cars unit for $1.8 billion, representing a coup for the independent Chinese automaker which is aiming to expand in Europe.
(snip)
The price, which includes a $200 million note with the remainder to be paid out in cash, is far less than the $6.45 billion Ford paid for the Swedish automaker in 1999. The U.S. automaker has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.
Ford lost about $4.65B on Volvo, which they can amortize over several years to net out the tax liability on their current income. Still, Ford's income tax expense last year was only $69mm, so it would take over 67 years to net the whole thing out at present earnings. Given that Ford can't hope for much growth in a mature car market like the U.S., the tax loss benefits of this debacle are really very tiny.
Geely comes out a big winner by grabbing a globally recognized brand for a song.
Nota bene: Anthony J. Alfidi has no position in the above-mentioned stocks at the time this post was published.
