Tata’s Bid for Jaguar and Land Rover Gets Ford Labor Union Blessing
Tata gains a small advantage in quest to buy Jaguar and Land Rover
By Brendan Moore
Jaguar and Land Rover combined employ around 16,000 people in England, and the union leaders are intent on not losing a single one of those jobs if and when Ford follows through on its stated desire to sell the two British car companies.
The union, Unite, met with all three of the companies on Ford’s short list of final bidders – Tata, fellow Indian car manufacturer Mahindra and Mahindra and One Equity Partners, a private equity group headed up by Jac Nasser, former CEO of Ford.
The general secretary of Unite, Tony Woodley, made a public statement that the union’s shop stewards had clearly stated their preference to stay as a part of Ford. However, if a sale was decided, the workforce’s best interests “would be served by finding a partner with an established presence and background in manufacturing”.
The union said further: “Based on serving the best interests of the union members at Jaguar Land Rover, the stewards agreed that Tata best fit these criteria.”
The endorsement of Tata by Unite will not figure prominently in Ford’s calculations regarding the sale of Jaguar and Land Rover, but on the other hand, it certainly cannot hurt Tata’s cause. The union still has some political power in England, and its approval would mean one less troublesome hurdle for the acquisition by Tata.
Tata has never made a secret of its desire to buy the two Ford units, and promised the unions today that it was in for the long run, and would not only not cut jobs, but provide investment to increase the size of both companies.
Mahindra and Mahindra has been far more coy about their interest in Jaguar and Land Rover, first saying it had some interest, but only on the right terms, then saying publicly that it had removed itself from the bidding, and then, re-inserting itself as a contender in the process. They too have apparently made promises of investment, etc. to the unions, but whatever was said was not as convincing as what Tata managing director Ravi Kant said.
One Equity is a private equity group and the union is reportedly quite leery of having them as the new owners of Jaguar and Land Rover, fearing the pressure of their business will require short-term results and the potential scenario of “flip and strip” whereby One Equity will fire workers, reduce costs, break the companies up and sell those pieces to the highest bidders.
Estimates of what the companies might actually sell for are all over the map, with suggested sale prices of anywhere from $1.5 billion USD to $3 billion USD. If I’m guessing, I say it will come in at approximately $2 billion actual price, after sale credits, etc. Just as an aside, everyone was all atwitter when Chrysler was sold for $7.4 billion, and then it quickly became apparent that Daimler had actually paid Cerberus approximately $700 million to tow Chrysler away. It was not a sale, but rather, simply a transaction (although, amazingly, the occasional news article still makes reference to the $7.4 billion sale price).
Either Indian company could easily realize the benefits they seek in buying Jaguar and Land Rover; acquisition of a global brand, overseas sales networks, high-end vehicle technology, state-of-the-art production facilities, the ability to transfer expertise to their home market products, and lastly, the thing that is never said, but understood by all, and that is the respect and prestige within the automotive world and the consumer market that go with the brands.
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