Takeover tycoon Tata gets JLR steering for $2.30 billion

Takeover tycoon Tata gets JLR steering for $2.30 billion
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First Published: Wed, Mar 26 2008. 07 06 PM IST
Updated: Wed, Mar 26 2008. 07 06 PM IST
H.S. Rao (PTI)
London: Creating history, India’s top corporate Tatas on Wednesday acquired luxury auto brands -- Jaguar and Land Rover -- from Ford Motor for $2.3 billion, stamping their authority as a takeover tycoon.
Beating compatriot Mahindra and Mahindra for the prestigious brands, just a year after acquiring steel giant Corus for $12.1 billion dollar, Tatas on Wednesday announced the deal they signed with Ford, which on its part would chip in $600 million towards JLR’s pension plan.
The deal was announced after protracted negotiations that Tatas had with JLR union workers.
“We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business,” Group Chairman Ratan Tata said after making the deal public.
“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.
Following are some of the major acquisitions by the Tata Group in recent years.
** Jan 2008 Tata Chemicals acquires US-based General Chemical Industrial Products for $1.01 bn ** Apr 2007 Indian Hotels acquires Campton Place Hotel in USfor $58 mn
** Jun 2007 TRF acquires control of Singapore’s York Transport Equipment ** Mar 2007 Tata Power picks stake in Indonesia’s PT Bumi Resources for $1.3 bn
** Jun 2007 Tata Power picks 30% stake in Indonesia’s PT Kaltim Prima Coal and PT Arutmin ** Jan 2007 Tata Steel acquires Anglo-Dutch steel maker Corusfor $12.1 bn, essaying the largest overseas takeover by an Indian company
** Apr 2007 VSNL acquires Transtel Telecoms of South Africa ** Aug 2006 Tata Tea acquires 30% in US’ Glaceau (Energy Brands) for $677 mn. Later sells it to Coca-Cola for $1.2 bn
** Apr 2007 Tata Tea acquires Poland’s Vitax and Flosana ** Jun 2006 - Tata Tea acquires US-based Eight’O Clock coffee company for $220 mn
(Table: PTI)
As part of the transaction, Ford will continue to supply Jaguar and Land Rover for differing period with powertrains, stampings and other vehicle components in addition to a variety of technologies such as environmental and platforms.
Ford has also committed to providing engineering support, including Research and Development plus information technology, accounting and other services.
In addition, Ford Motor Credit Company will provide financing for JLR dealers and customers during a transitional period, which can vary by market, for up to 12 months.
Ford Motor CEO and President Alan Mulally said: “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.
“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 Co that delivers profitable growth for all,” he said.
When contacted, Tata Motors spokesperson said the deal would be funded through a mix of existing cash reserves and new debt facilities which will be raised at the company level.
“We have already committed financing from our banks which along with our existing cash reserve is sufficient,” he said.
The deal is expected to be completed by the end of next quarter and is subject to customary closing conditions, including receipt of regulatory approvals, the two companies said in separate press statements.
Tata Motors and Ford said the arrangement will support JLR’s current product plan, while providing the two brands with the freedom to develop their own standalone capabilities in the future that will best serve their manufacturers requirement.
Both the parties said they do not anticipate any significant changes to JLR employees’ terms of employment on completion of the deal.
JLR employees’ trade unions and the UK government have been kept informed on developments as the sale process progressed and have indicated their support to the agreement.
Meanwhile, thousands of employees of JLR welcomed the deal with the trade union leader Roger Maddison, saying: “Today’s deal is really good news for the UK automotive industry and the thousands of people who work for Land Rover Jaguar and its supply chain.”
Ford Motor Company’s Executive Vice President Lewis Booth said: “This is a good agreement. It provides JLR management team and employees with the assurances needed to maintain their focus in delivering the best results for the business.”
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First Published: Wed, Mar 26 2008. 07 06 PM IST
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