(Adds analyst comments, details)
By Poornima Gupta
DETROIT, May 29 (Reuters) - Ford Motor Co. (F.N) on Tuesday said it was not in discussions aimed at a sale of its Swedish unit Volvo, denying reports its was mulling an immediate disposition of a unit seen as its most valuable luxury brand.
Swedish newspaper Goteborgs Posten said on Monday that Ford was eyeing a sale of its Volvo brand and named German carmaker BMW (BMWG.DE) as a possible buyer.
That followed a report on Friday in the Financial Times saying that BMW had been in informal talks to buy Volvo from the struggling No. 2 U.S. automaker.
Ford, which has faced scrutiny over how it will raise and maintain liquidity as it restructures its money-losing North American operations, initially declined to comment on the reports then issued a denial on Tuesday.
“Ford Motor Company is not in discussions with BMW or any other company regarding an interest in the Volvo Car Corporation,” the statement released on Tuesday said.
It continued: “We have seen this kind of speculation for the past year, as Ford Motor Company has been assessing our operations and portfolio — as any good business does and we will continue to do.”
While analysts said there was no urgent need for Ford to rush into a sale of one of its luxury brands, several also said they expected the automaker to remain open to such an option if the right opportunity presented itself.
“If they can get a good price for it (Volvo), it’s something they can look at,” said Kam Hon, a credit analyst at DBRS ratings agency. “They are not in a hurry to do it.”
Ford raised about $23.5 billion at the end of 2006 by pledging most of its North American automotive assets, including plants and equipment, as collateral.
Pete Hastings, a corporate bond analyst at Morgan Keegan, noted that Ford was still burning cash.
Along with looming contract talks with the United Auto Workers union, that strengthens the case for asset sales, although a deal is not urgent for Ford, Hastings said.
Larger rival General Motors Corp. (GM.N) last week put up its 49-percent stake in its former financial arm as collateral for a $4.1 billion revolving line of credit.
Analysts have said GM’s credit line can be seen as a hedge against a declining U.S. auto market and the possibility of a production disruption as a result of looming contract talks this summer between U.S auto companies and the United Auto Workers union.
GM also said last week that it was likely to sell its Allison Transmission unit.
The profitability of Ford’s luxury brands, dubbed the Premier Automotive Group, has been volatile.
The brands — Volvo, Jaguar, Aston Martin and Land Rover — had been expected to contribute one-third of Ford’s forecast profits. The automaker abandoned that goal in 2005 and sold Aston Martin in March for $925 million.
Ford could raise more than $9 billion by selling its remaining luxury car brands, Merrill Lynch analyst John Murphy said, after the Aston Martin sale.
Murphy estimated that the combined sale of Jaguar and Land Rover could raise between $1.3 billion to $1.5 billion for Ford, while a sale of Volvo could raise about $8 billion.
(Additional reporting by Michael Shields in Frankfurt)
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