March 26, 2008 India's Tatas Seal
Deal to buy Jaguar,
Land Rover for $2.3 bn By Quaid Najmi and Dipankar De Sarkar
Mumbai/London
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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