Ford sale of Jaguar to Tata Motors is expected
The Indian Group’s automotive arm Tata Motors is the preferred bidder of the US car giant Ford for sale of its two British luxury brands, Jaguar and Land Rover. British luxury car maker Jaguar has shown its new models and the planned product cycle to its probable new parent Tata group. The other suitors after evaluating interests are India’s Mahindra and Mahindra and private equity firm OneEquity.
Ian Callum, Director (design) who is responsible for the Jaguar’s new XF and XK model ranges, has shown Tata the new model lines and the planned product cycle. Tata Motors is currently holding advanced-level talks for buying Jaguar and Land Rover from Ford and a final decision is expected to be announced by the end of February. Tatas have pipped Indian automaker Mahindra and Mahindra as well as US-based private equity firm OneEquity, led by former Ford CEO Jacques Nasser, to attain the preferred status to hold advanced discussions for a final deal.
Tata’s purchase of Jaguar and Land Rover for an estimated two billion dollar was “a done deal” between Tata and Ford. However, the actual cost of the purchase will go up if the pension liabilities of these two businesses and the future technology support deal between the Tata Motors and Ford are taken into account. As a result of this Tata Motors has started talks with a host of banks to raise funds to finance the purchase. Calyon Bank, Standard Chartered Bank, ABN Amro, ICICI and SBI are believed to be in talks with Tata Motors. According to the Investment Banking sources the funds will be mobilised on the strength of Tata Motors’ balance sheet.
Ford and Tata Motors are now engaged in negotiating the terms on over a dozen long-term agreements covering the supply of engines, components and technology for the two brands. The takeover of Jaguar and Land Rover will be Tata Motors’ first acquisition in Europe. Ford had bought Jaguar for $2.5 billion and Land Rover from BMW for $2.7 billion.
The management of luxury carmaker Jaguar is “entirely relaxed” about the prospects of Indian conglomerate Tata Group taking over the brand along with Land Rover. Both luxury brands are owned by US carmaker Ford Motors. Ford had named Tata Motors, which is part of the Tata Group, as the preferred bidder for its British marquees- Jaguar and Land Rover, but a final decision for the sale is yet to be taken.
The Tatas, as owners of Anglo-Dutch steelmaker Corus, are already one of the top suppliers for Jaguar and Land Rover. Eventhough there had been frequent tensions in the relationship between Jaguar and Ford, following the purchase by the latter in 1989. Ford had bought Jaguar for about $1.4 billion. Now it is looking for the deal of $2.5 billion with Jaguar.
Tags: Ford, jaguar, land rover, sale, Tata motors