Indian auto major Tata Motors has clinched the Jaguar and Land Rover deal estimated to be valued at $2.3 billion. The deal has taken almost nine months to finalise as both Ford and Tata and their financiers sought to iron out issues seen as crucial to the future of the two British marquees.
This erstwhile British symbol of luxury now belongs to Indian giant Tata
After months of negotiations with Ford Motor Company, India's largest auto maker Tata Motors has signed an agreement to buy out luxury marquees Jaguar and Land Rover.
With the takeover of the two British automobile marquees, the $28.8 billion Tata group, which already has 98 companies in its fold, will add two more prominent names to its growing roster of global acquisitions.
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 dollars in 2006 -- the heaviest in its 103-year history.
The Tatas were named by Ford as the preferred bidder in January after they beat off competition from fellow Indian carmaker Mahindra and Mahindra and American buy-up specialist One Equity -- a move which was also welcomed by the workers.
Automobile expert Arvind Padhmanabhan explained the significance of the achievement:
“An acquisition worth 2.3 billion is not large for the Tatas. But Jaguar and Land Rover will give Tata Motors a global presence. More importantly, it will give access to the best of technologies and drive their growth across segments. A luxury brand in both sedans and sports utility is what they needed and they got it.”
The only question mark that surrounds the acquisition is one being posed by some industry watchers in the US -- over the branding of the two luxury cars, given that Tata Motors unveiled the Nano, the world's cheapest car, this year.
Largest Indian motor firm
Tata Motors is India's largest automobile company, with revenues of $7.2 billion in 2006-7. With over four million Tata vehicles plying in India, it is the leader in commercial vehicles and the second largest in passenger vehicles.
Commerce Minister Kamal Nath said the acquisition was good news for India: “It is not only good news but again the Indian corporate world that the Tatas has demonstrated to the global business community that while we talk of a global economic slowdown we are aggressive, competent.”
Tata Steel has made three major acquisitions worth some $13 billion in the past few years.
Barely a year ago, it paid over $12 billion to acquire Anglo-Dutch steel maker Corus, in what remains the largest buy-out deal overseas by an Indian company till date.
Going by what the senior executives of Tata Sons -- the holding arm of the group that has 27 listed companies -- maintain, the appetite for such mega mergers and acquisitions is only growing with each deal.