Analysts jump on Ford-Nissan bandwagon

By MSN Money staff with wires

Analysts have been jumping on media reports that Ford Motor (F, news, msgs) chief Bill Ford had called Carlos Ghosn, chief executive of both France's Renault (FR:FR0000131906, news, msgs) and Japan's Nissan Motor (NSANY, news, msgs), to propose talks in case Ghosn's discussions with General Motors (GM, news, msgs) lead nowhere by mid-October.

A partnership between the Renault-Nissan alliance and Ford would deliver more synergy benefits than a Renault-Nissan tie-up with GM, analysts said on Thursday.

"A deal with Ford would make far more sense than one with General Motors," Patrice Solaro, Kepler Equities analyst, told Reuters.

"Not only are the synergies between Ford and Nissan on the North American market larger, but in Europe a deal with Ford would also generate more opportunities than with GM," Solaro added. "Ford in Europe is also Jaguar, Volvo, Land Rover, Aston Martin."

Both Renault and Ford have declined comment on the reports.

GM talks losing steam?

In the midst of a media frenzy over a possible GM-Renault-Nissan partnership, Ghosn and GM Chairman Rick Wagoner have been taking a cautious line.

Ghosn has said any decision depends on the synergies that can be realized, while Wagoner is focusing on his own restructuring of the world's biggest carmaker.

Rod Lache, an analyst at Deutsche Bank, also said a deal with Ford would create more value.

"We believe Ford's purchasing is relatively inefficient -- an area where Renault/Nissan has substantial expertise. There could also be benefits should investment-grade partners get involved in co-ownership of the Ford Credit business," he added.

Ford shares surged more than 4% Wednesday, following a report in The Wall Street Journal, which cited "a person well-positioned to know." The shares were up another 1.3% Thursday afternoon.

Ford seeking a lifeline

Ford is also considering other options -- including the possibility of taking the company private, USA Today reported on its Web site Thursday, citing a "source with direct knowledge of the discussions."

Going private would give the automaker time to restructure operations outside the glare of critics, the article said.

"The family is willing to look at anything," USA Today quoted the source as saying. Top executives have said they are looking at every option available to turn Ford around, including selling off brands such as Jaguar, entering into partnerships with other automakers, slashing its work force and closing more plants.

A Ford spokesman said: "This is speculation and we don't comment on speculation."

Ghosn's star power

Ford's interest in an alliance comes as no surprise, given its mounting losses and dwindling market share in North America amid slumping demand for pickup trucks and sport-utility vehicles.

Renault has a 44% stake in Nissan, the Japanese car maker that Ghosn turned around against difficult odds, securing for himself the reputation of a star automotive manager.

At Renault, Ghosn has unveiled a Commitment 2009 plan, based on an overhaul of its models and a lower cost base. The company needs to start delivering results in 2007 after a weak 2006.

Ford has acknowledged courting Ghosn for a senior post at Ford in Dearborn, Mich., but Ghosn, a Brazil-born Frenchman of Lebanese parents, has declined.

One investment banker who follows the sector closely said recently a Renault-Nissan link with Ford would be simpler and more effective than one with GM because there would be less overlap of brands.

"I'm sure that if Carlos Ghosn doesn't succeed with General Motors he will look at Ford or one of the other players," the banker said, although the strong influence the Ford family exercises at the company could pose an obstacle.

Kepler Equities' Solaro believes that obstacle could be overcome, however. He wonders whether Renault would want an equity stake in Ford, in line with its stake in Nissan and reports of intentions to take a stake in GM in case of an alliance deal.

In that case it would probably want the same power as the Ford family, which at the moment has 40% of the votes with about 4% of the capital, according to Reuters. Deutsche Bank's Lache agreed that this problem was not insurmountable.