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TATA’s Jaguar-Land Rover Deal!!!

Posted by Madhuresh on March 28, 2008

My class mate aka harri puttar and shashank aka Zombie were sitting in the Garden of IPE Discussing about TATA’s Deal with FORD. Earlier harri had given me his expert insights into How tata’s are planning to fund to whole deal. We also discussed  the ongoing  buying spree of TATA’s(click here to see a list of recent acquisitions).  In a series of articles i wish to analyze why is tata buying so much?? But 1st here is a article from http://media.ford.com/newsroom/release_display.cfm?release=27953 A detailed insights into what all tata is getting kindly read the highlighted points as i feel they might be important.

FORD MOTOR COMPANY ANNOUNCES AGREEMENT TO SELL JAGUAR LAND ROVER TO TATA MOTORS

DEARBORN, Mich., March 26, 2008Ford Motor Companyy [NYSE: F] announced today that it has entered into a definitive agreement to sell its Jaguar Land Rover operations to Tata Motors. 

The transaction is the culmination of Ford’s decision last August to explore strategic options for the Jaguar Land Rover business, as the company accelerates its focus on its core Ford brand and “One Ford” global transformation. 

The sale is expected to close by the end of the next quarter and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The total amount to be paid in cash by Tata Motors for Jaguar Land Rover upon closing will be approximately US $2.3 billion.   At closing, Ford will then contribute up to approximately US $600 million to the Jaguar Land Rover pension plans.

“Jaguar and Land Rover are terrific brands,” said Alan Mulally, president and CEO, Ford Motor Company.  “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 Company that delivers profitable growth for all.”

“This is a good agreement.  It provides the Jaguar Land Rover management team and employees with the assurances needed to maintain their focus on delivering the best results for the business,” said Lewis Booth, executive vice president, Ford Motor Company, who has responsibility for Ford of Europe, Volvo and Jaguar Land Rover.  “I am confident that, under its new owner, Jaguar Land Rover will continue to build upon the significant improvements and product successes it has achieved in recent years.” 

As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologiesFord also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.

In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.

The parties believe these arrangements will support Jaguar Land Rover’s current product plans, while providing Jaguar Land Rover freedom to develop its own stand-alone capabilities in the future that will best serve its premium manufacturer requirements.

The parties do not anticipate any significant changes to Jaguar Land Rover employees’ terms of employment on completion.

Speaking about today’s agreement, Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors, commented:  “We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.”

Jaguar Land Rover’s employees, trade unions and the UK Government have been kept informed of developments as the sale process progressed and have indicated their support for the agreement.

Speaking on behalf of Jaguar Land Rover, Geoff Polites, chief executive officer, said:  “Jaguar Land Rover’s management team is very pleased that Ford and Tata Motors have come to an agreement today.  Our team has been consulted extensively on the deal content and feels confident that it provides for the business needs of both our brands going forward.

“We have also had the opportunity to meet senior executives from Tata Motors and the Tata group,” Polites continued.  “They have expressed confidence in the team that has delivered significant improvements in Jaguar Land Rover’s business performance.  We feel confident that we can forge a strong working relationship with our new parent company, and we look forward to a bright and successful future for Jaguar Land Rover.”

So  what do we understand

  • Ford is not going to give the “know how” of certain technologies like powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies
  • For a period of time ford will finance for jaguar and rovers customers
  • Tata’s is going to support their growth and Jaguar Land Rover’s employees will develop it.

If they are not getting the “know how of technology” and that can’t be use at tata motors then y did they buy it?? The answer might be Defence??

In the next article i wish to bring you a detailed repront DEFENCE AND TATA( After opening of defence sector in 2001)

As of now! that’s it.

I thank Hemant and shashank for their valuable insights and inspiring me to do a research on the same.

Keep visiting!!!

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5 Responses to “TATA’s Jaguar-Land Rover Deal!!!”

  1. Allsace PSX said

    Sadly, getting rich by reprocessing junk for a genuinely poverty striken and overpopulated market like India is in no way going to help sales of Jaguars and Range Rovers throughout the planet. We can all effectually regard these two brands as having been permanantly dissolved. They are now headed into history. Anyone who thinks otherwise is having a fantasy spell and we all know it.

  2. Pavan said

    Well…. Good article. But I dont see how you can conclude those 3 points. I dint see any evidence for those 3 points you mentioned. Is that an assumption ??

  3. Madhuresh said

    Thank you for the replies.. well answering you pavan. they are not assumptions you see the points that i have highlighted suggest that. there are many other hints that are given in the press statements that i will be posting in the coming articles..and answering to you ALLSACE PSX…

    “Even if tata owns it the brands cant be sold in india without relaxing the duty. So one shud congragulate TATA’s for the effort they will be putting in to keep these brands going and saving more than 17,000 people from unemployment.

    Only tata’s can have the courage to have such a diversified automobile portfolio and that too at such a fast pace. Besides the same assumptions where made when ford acquired them from BMW(land rover for $2.3bn in 2000) and Public investors(Jaguar for $2.5bn in 1989)
    So lets see what happens…Dont under estimate india…

    Keep visiting for further articles…trust me there is lot of information into this deal…”

    THhanks again…

  4. bharat said

    good article…i’d like to make a few clarifications thou…

    Firstly, the deal b/w TATAs n FORD is dat FORD will provide the knowhow for JLR, n will continue to supply various technologies for JLR including engg support, Info technology, R&D etc….

    Good acquisition if they want the knowhow….but then again wat r the TATAs goin to do with the knowhow??
    make another luxury car/iconic brand like the jaguar or a SUV like the Landrover?? n the bigger question make it for the Indian market??

    TATA also says that the parts for JLR might be sourced from India as they have always preferred Indian suppliers n parts..now that is a joke….will an brand like JLR actually sell if the parts were from India???

    the general feeling here is dat this time around TATA has gotten himself into the drain…n looks like FORD actually got a better deal in this one….

    But then again if there’s one person who can come out of the drain still smellin good its RATAN TATA..so the topic still remains to be discussed….

    n by the way JRD always wanted an iconic brand in the TATA Motors(then TELCO) stable….Prob Ratan is just fulfilling his last wish….

  5. cyanogen said

    Cyanogen says : I absolutely agree with this !

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