Assorted articles and Information

After taking over Corus and Jaguar, the Tata group is in talks for a partnership with Brazilian aircraft manufacturer Embraer. According to sources talks were on with Embraer for starting a joint venture for production of aircraft. The world’s third-largest plane manufacturer is unable to cope with orders it is getting from various countries and private players.

Embraer (Empresa Brasileira de Aeronutica) is the world’s largest manufacturer of commercial jets of up to 120 seats, and one of Brazil’s leading exporters. Founded in 1969, the company designs, develops and sells aircraft for commercial aviation, executive aviation, and defence and government segments. It also provides after-sales services to customers worldwide. On March 31, 2008, it had 23,878 employees and an order-book of $20.3 billion. It is headquartered in Sao Paulo, it has offices, industrial operations and customer service facilities in Brazil, the US, France, Portugal, China and Singapore.

Tata group chairman Ratan Tata says, “This joint venture between the Tata group and Boeing is an important part of our strategy to build capabilities in defence and aerospace”. In the same month, Singapore-based BJets, Asia’s leading private jet company catering to corporations and rich individuals, had announced a tie-up with Tata group firm Indian Hotels as a “significant investor”. BJet’s flight operations will begin in May 2008 and will be headquartered in Mumbai.

Earlier in February, the world’s leading aircraft maker Boeing and Tata Industries had agreed on a plan to form a joint venture company that will initially include more than $500 million of defence-related aerospace component work in India for export to Boeing. The company is scheduled to be set up by June 2008.

US luxury hotel chain Orient-Express, where Tatas have become the second largest shareholders, has said takeover talks could affect its share price, even as anti-takeover measures are in place. However, time could be running out for the cosy position of the OEH management which could soon be derailed by hedge funds. Such intervention has helped steel tycoon Lakshmi Mittal’s hostile takeover of Arcelor in face of a hostile management.

The OEH in its annual report for 2007, being sent to its shareholders, said share price can fluctuate significantly due to various factors including market speculation about a potential acquisition of OEH. The company has made it clear that any hostile offer was bound to fail in the current scenario and any such bid would need to win over the company’s board and management.

According to the report, Indian Hotels holds 11.5 per cent Class A common shares of the company, making it the second largest stakeholder after Bermuda-based Orient-Express Holdings Ltd (29.8 per cent). The Tatas may be new to this kind of resistance from the management but they are the favourites of the shareholders which was seen in the takeover of the Corus and could possibly be repeated in the Jaguar-Land Rover deal. In the Corus deal, Tatas had got the support of the Corus board and everything was moving smoothly until the Brazilian steel major also announced its bid for Corus. The board then decided to look at the Brazilian bid. But the takeover panel stepped in and said that there should be bidding and the Tatas sailed to victory.

In the ongoing Jaguar deal, it is the workers who seem to be in favour of the Tatas. There has been some racist sentiments coming out of the US where they feel  to have the Jaguar brand under an Indian group. But such sentiments collapse out before good business sense as was seen in the Arcelor takeover.

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.