India’s Tatas seal deal to buy Jaguar, Land Rover for $2.3 bnMarch 26th, 2008 - 7:51 pm ICT by admin
By Quaid Najmi and Dipankar De Sarkar
Mumbai/London, March 26 (IANS) Tata Motors said Wednesday that an agreement has been reached with Ford Motor Co to buy two iconic British auto brands - Jaguar and Land Rover - for $2.3 billion in yet another high-notch acquisition by a globally ambitious Indian company. “The transfer of ownership to Tata Motors is expected to close by the end of the next quarter, subject to applicable regulatory approvals,” said a statement by the group, India’s largest business house.
“The total amount to be paid in cash by Tata Motors for Jaguar, Land Rover upon closing will be approximately $2.3 billion. At closing, Ford will contribute up to approximately $600 million to the Jaguar, Land Rover pension plans.”
The announcement comes barely a year after the group acquired Anglo-Dutch steel maker Corus for approximately $12 billion to catapult the Tatas as the fifth largest producer of the commodity in the world.
Tata officials said Ford will continue to supply Jaguar and Land Rover vehicle components for an agreed period in addition to a wide variety of technologies, such as environmental and platform technologies.
“We are very pleased at the prospect of Jaguar, Land Rover being a significant part of our automotive business,” said Tata group chairman Ratan Naval Tata, 70, who has spearheaded the conglomerate’s global acquisition bid in recent years.
“We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact,” he said in a statement.
“We aim to support their growth, while holding true to our principle of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.”
Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000. But the US auto major put the two marquees on the market in 2007 after posting losses of $12.6 billion in 2006 - the heaviest in its 103-year history.
“Jaguar and Land Rover are terrific brands. We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata’s stewardship,” said Ford’s chief executive Alan Mulally.
“Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all.”
The Tatas were named by Ford as the preferred bidder in January as they beat off competition from fellow Indian carmaker Mahindra and Mahindra and American buy-up specialist One Equity - a move also welcomed by the workers.
“We would have much preferred Ford to keep the companies in the family - so to speak - especially with Land Rover being so profitable,” said Tony Woodley, joint head of Britain’s biggest trade union Unite on the takeover.
“But with the commitments the Tatas have given to the future of Jaguar-Land Rover and the long-term supply agreements for components, especially engines from Bridgend and Dagenham, we’re obviously pleased, he said in London Wednesday.
The acquisition by the Tatas saves up to 40,000 British jobs.
While the three Jaguar and Land Rover factories in Britain employ 16,000 people, the number swells to around 40,000 when ancillary units are taken into account, according to Andrew Dodgson of Unite.
The only question mark that surrounds the acquisition is one posed by some industry watchers in the US - over the branding of the two luxury brands, given that Tata Motors have unveiled the Nano, the world’s cheapest car, this year.
Tata Motors is India’s largest automobile company, with revenues of $7.2 billion in 2006-07. With over 4 million Tata vehicles plying in India, it is the leader in commercial vehicles and the second largest in passenger vehicles.
In the past few years, the Tata group has led the growing appetite among Indian companies to acquire businesses overseas in Europe, the United States, Australia and Africa - some even several times larger - in a bid to consolidate operations and emerge as the new age multinationals.
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