Wednesday, October 28, 2009

What is a "Preferred Bidder"?

News outlets are reporting today that Geely, a HK-listed, "private" Chinese automaker, is the "preferred bidder" for Ford's Volvo unit. (Stories at Bloomberg and WSJ.)

I'm a little confused by this announcement. What exactly is a preferred bidder? What is it about the bidder that would lead Ford to approve Geely over another?

Correct me if I'm wrong, but when you're trying to unload a money-losing asset while taking as small a loss as possible, wouldn't you be more focused on the bid than the bidder?

If I were a Ford shareholder (and I probably am through mutual funds), that's where my concern would lie.