Tata mulls Jaguar, Land Rover buy

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

In recent years, Ford, which depends much more on sales of light truck models, such as SUVs, pickups and minivans than on the more fuel-efficient car models, found itself battered by high gasoline prices, rising pension and retiree health costs in the United States even as Japanese automakers like Toyota dominated U.S. sales and won the hearts of US consumers with what many view as more reliable, fuel-efficient models.

Ford reported losses of $12.6 billion last year.

When Ford sold Aston Martin for $848 million in March, it had denied any plans of selling the other divisions of its Premier Automotive Group, which include Jaguar, Land Rover and the Swedish carmaker Volvo.

However, Ford spokesman John Gardiner recently said the company was "actively" studying options that could include the sale of its legendary British nameplates Jaguar and Land Rover as part of a company-wide strategic review.

A British newspaper, The Sunday Times, citing unnamed sources in London, also said, July 15, the decision to sell Volvo was made in the past two weeks, but that the timing of the sale had yet to be decided. No bank had been appointed to handle the transaction, the newspaper said, adding the deal could be worth $8 billion.

Ford bought Jaguar in 1989 for $2.5 billion, Volvo's car operations in 1999 from Sweden's Volvo AB for $6.45 billion and Land Rover in 2000 from BMW for $2.73 billion.

Ford officials were not available for comment.

According to sources close to the development, Tata Motors, whose parent group is one of India's largest and most respected business conglomerates having business interests spanning engineering, mining and energy to consumer products, IT and hotels and having operations in more than 40 countries, had appointed advisors to evaluate a bid and also signed a confidentiality agreement with Ford for access to the financials of the luxury brands.

When contacted, a Tata Motors spokesperson said the company does not comment on speculation on mergers and acquisitions.

Sources also said Mahindra & Mahindra (M&M), India's leading manufacturers of general-purpose utility vehicles and light commercial vehicles, and some other private equity players might also be interested in these brands.

However, industry analysts feel that Mahnidra & Mahindra might not be very keen, as Jaguar and Land Rover might not fit into its overall plan.

M&M officials have refused to comment on whether it was interested in bidding.

According to the Daily Telegraph, analysts have suggested that Jaguar and Land Rover sale may fetch at least $1.5 billion (£735 million) to Ford.

Ford has reportedly asked Goldman Sachs, Morgan Stanley and HSBC to advise on the sale.

Private equity firms Apollo Management, Cerberus Capital Management, Blackstone Group and Alchemy Partners have reportedly shown interest in the Jaguar-Land Rover deal.

Industry watchers claim that if Tata is successful, the deal would rank among India's biggest overseas takeover deals. The Tata Group, which has been involved in major overseas takeovers in recent times, including the £6.7 billion acquisition of Anglo-Dutch steel company Corus through Tata Steel earlier this year, reported revenues of $21.9 billion in 2005-06.

Tata Motors, which listed on the NYSE in 2004, has been making rapid strides for a greater share of the global auto business.

It has a partnership with Fiat that gives it access to the Italian auto major's world-class powertrains for its next generation car offerings and also helps it penetrate foreign markets.

The company also acquired a 21 percent stake in Spanish bus company Hispano Carrocera in 2005 and also has a joint venture with Brazil's Marco Polo for buses and coaches.

In 2004, Tata Motors acquired the ailing commercial truck division of South Korean Daewoo for about $116 million and later renamed it Tata Daewoo Commercial Vehicle.