UPDATE 5Tata to buy Fords Jaguar Land Rover for 2.3 bln
(Adds deal advisers, updates share price)
By Sumeet Chatterjee and Kevin Krolicki
MUMBAI/DETROIT, March 26 (Reuters) - India’s Tata Motors
Ltd (TAMO.BO: Quote, Profile, Research)(TTM.N: Quote, Profile, Research) announced a $2.3 billion deal on Wednesday
to buy Jaguar and Land Rover from Ford Motor Co (F.N: Quote, Profile, Research), a
transaction that gives the Indian automaker a line-up ranging
from the world’s cheapest car to some of its more expensive.
For Tata, which plans to launch the ultra-cheap $2,500 Nano
or “People’s Car,” the addition of the profitable Land Rover
brand provides an edge against Indian rival Mahindra %26amp; Mahindra
Ltd (MAHM.BO: Quote, Profile, Research), which had also pursued a deal with Ford.
Ford, for its part, gets to shed the money-losing Jaguar
brand and gains a cash infusion at a time when the U.S. market
is slumping and it is attempting to bounce back from combined
losses of more than $15 billion over the past two years.
The sale price is roughly 40 percent of what Ford paid for
the two brands. Ford acquired Jaguar for $2.5 billion in 1989,
but failed to turn the British nameplate into a higher-volume
brand. Ford paid $2.75 billion for Land Rover in 2000.
The deal also underscores the shifting balance of power in
the global auto industry, where India and other emerging
markets are expected to account for almost all of the growth in
production over the next five years. None of the established
European automakers, including BMW AG or Daimler AG (DAIGn.DE: Quote, Profile, Research),
pursued Jaguar and Land Rover.
They face a new competitor in Tata Group Chairman Ratan
Tata, a jet-flying businessman, and his Tata Motors, India’s
No. 3 car maker and a unit of the far-flung Tata conglomerate
that got its start making locomotives after World War Two.
Ford will contribute up to $600 million to Jaguar and Land
Rover pension plans after the closing of the deal, expected in
the second quarter. Ford will also continue to supply engines
and related components, while providing financing for dealers
for up to a year, both companies said. Ford will net about $1.7
billion, in line with expectations. Continued…
