Rumors swirl about BMW’s future
The controlling interest in BMW is owned, like that in Ford, by one family. In BMW’s case, that family is the Quandt family. Lately, there has been speculation that the Quandt family is contemplating selling their controlling shareholding in the company.
On Monday, the Quandt famly issued a strongly worded denial about the notion that they would be selling their interest in BMW: “That is absolute rubbish. I have no idea where in the world that’s coming from... It’s absolutely groundless,” according to a spokesman.
The Quandt family, consisting of Herbert Quandt’s widow Johanna and her two children, Stefan and Susanne, are the survivors of the German industrialist who took control of the company in the 1960s after a shareholder revolt against selling the company to Daimler-Benz. The greatest portion of the family fortune is their stake in BMW.
Their support has been critical to the growth of the company, as it has allowed management to focus on long-term results rather than moment to moment share prices or dividend increases. Lately, however, market analysts have criticized BWM management for poor stock performance, a consequence of what the market has viewed as poor earnings despite BMW’s increasing share of the market. One analyst believes the company should cut costs.
Of course, if stock analysts could actually run car companies, one presumes they would do so.
It seems far more likely that a different rumor is closer to the truth: that BMW really is interested in acquiring Volvo.
BMW’s finance director, Stefan Krause, recently told a German newspaper, Borsen-Zeitung, that “the possibility of acquisitions is not ruled out in principle.” It is known that BMW representatives have met with Volvo officials in Sweden, apparently to better assess the company’s books.
What is clear is that the Quandt family’s support is critical to whatever move BMW makes. With that support, the management can ignore those who would like to see it use its cash to increase dividends and can, instead, invest in the purchase of Volvo, an acquisition which will likely require investment beyond the purchase price. Given the success of the company, it is difficult to see any reason that the Quandt family would be interested in selling out. The value of their stake is not especially tied to the market value of the stock, as it is a controlling interest. What strengthens the company in the long term is obviously in their financial interests, as well.