Ford Will Announce Sale of Jaguar and Land Rover to Tata Wednesday

By Brendan Moore

03.25.2008

The Financial Times said yesterday that Ford Motor Co. will announce on Wednesday the sale of Jaguar and Land Rover to Tata, the Indian auto manufacturer.

The sale is around $2 billion USD, but the deal was not just about the money.

Ford will continue to contribute to the workers pension funds at Jaguar and Land Rover, and Tata will buy Ford engines and transmissions as part of the deal. Tata has also agreed to retain the three British manufacturing facilities at Solihull, Castle Bromwich and Halewood where Ford employs 13,500 people. They have also assured the unions that there will be no job cuts at these plants.

Tata is borrowing $3 billion to find the deal. A consortium of banks including JP Morgan Chase, Citigroup, BNP Paribas, State Bank of India and Standard Chartered helped Tata get the $3 billion it needed for the deal.

Why the higher amount? Although a good part of this money ($2 billion) would go towards funding the deal itself, the remainder will be used to meet working capital requirements, a good sign for the immediate future of the two iconic brands.

The parting has to be bittersweet for Ford. The company lost $2.7 billion in 2007 and a staggering $12.6 billion in 2006, and is jettisoning Jaguar and Land Rover to focus on turning around its failing core operations in North America.

Ford acquired Land Rover from German carmaker BMW in 2000 as part of BMW’s divesture of it’s own failing British brand acquisitions. It bought Jaguar in 1989. The two brands were part of the Premier Automotive Group (PAG) at Ford, which warranted its own headquarters away from Detroit in Irvine, CA and which also had Aston Martin, Jaguar, Land Rover and Volvo as members. The PAG was supposed to be Ford’s luxury segment behemoth that they would use to conquer markets worldwide. Volvo will now be the only marque left in PAG, since Aston Martin was sold last year.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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1 Comment

  1. The world’s cheapest car, and now two of the world’s most expensive. And not much into between,

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