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Ford to Tata: $2 billion is just the beginning for Jag and Land Rover
Not that anyone will be surprised, but Tata (nor any winning bidder, if not Tata) can't simply send Ford a money order for $2 billion and have Jaguar and Land Rover delivered to its door. Jaguar and Land Rover are so tied up with Ford that "the buyer of the brands would ... need Ford's research facilities to upgrade the products." And Ford won't give that access away for free. Tata will also be assuming pension liabilities, and though there hasn't been a number put to it, we all know how expensive that can get.
The result is that Tata and Ford are not discussing one deal, but 15-20 deals. All Ford would say is that they "are in substantive and detailed discussions with a view to securing an agreement." The deals would ostensibly secure continuation of parts like engines and technology, support for those parts, and the undoubtedly intense and lengthy training that Tata would need to insure the smoothest transition possible. All of which shows that this sale has not only gotten much more expensive, but much more complex, and for a much longer time to come.
[Source: Reuters]
Reader Comments (Page 1 of 2)
Anirudh 2:06PM (1/23/2008)
The TATA's have already wasted considerable time on this deal n its gettin them nowhere, just a wastage of time and effort. Considering the actual pension dues are around $ 10 billion it's not small change add another couple of billions and the deal is worth $ 12 billion.
But considering how well they integrated with corus, u never know. They might just make it a viable project(Jag n Rover r some of the most distinguished brands on the planet), keep hanging on to this section till we get a verdict.
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John P. 11:41AM (1/18/2008)
Something tells me this whole deal is not going to end well. People had a hard enough time dealing with buying a Forduar, let alone a Tatuar. I hope I'm wrong. Jag and Lang Rover are/were at least iconic brands.
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cowboy bob 12:25PM (1/18/2008)
I believe you are correct John. It has been my experience that the more complex the deal, the less likely it is to transition without a war. People may have high positions in industry, but they still react like kids on a playground when somebody starts to hog the ball.
Mr. Oak 11:56AM (1/18/2008)
Ha! Tata took the bait, now Ford is trying to set the hook. LR and Jag are being pimped like street walkers.
Sure the "date" only cost 50 bucks, but what does the room cost, and the trip to the doctor later on?
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Jerk Face 12:07PM (1/18/2008)
That was a great analogy, Ha ha..
Throwback 11:58AM (1/18/2008)
This is sounding like a better deal for Ford. They end up as a supplier, they off-load the cost of future development, AND get some cash.
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Eric L 12:51PM (1/18/2008)
This is truly a sad situation. The life-long Ford-guy in me is happy that Ford is finding a way to beat the slump and remain solvent. However, the die-hard LR fan in me is so angry that the iconic British brand is being sold off like a cheap hooker just to pay the pimp's rent. Shame on you Ford.
When is the LRX going on sale, again?
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psarhjinian 5:18PM (1/18/2008)
Maybe if Land Rovers didn't have such a tendency to be glitchy buggers, then perhaps they would have sold better and remained within Ford?
And that goes double for Jaguar. You cannot ask people to sacrifice tens of thousands of dollars on the altar of Lucas, prince of darkness.
John Johnson 12:32PM (1/18/2008)
This sounds like a role reversal of an all too familiar story.
Watch out for Tata at LeMans.
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chrisdavis 12:37PM (1/18/2008)
Sounds like Ford is trying to be good stewards of two legendary brands. They could take their check, walk, and let them wither and it wouldn't upset their stock one bit.
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jagman 8:24PM (1/27/2008)
Not affect their stock one bit? Ha! Ford´s stock is plummeting. From $9 a share in November to just $6 recently, Ford is in a jam that will not be very easy to get out of.
YouKNow ImRight 12:39PM (1/18/2008)
TATA is an ace upright company on its way to the big league. It should walk away from Fords greedy back -room dealings . Ford will just milk the deal and ruin the future of these great british icons. Ther are plenty other great icons TATA can invest in the market.
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Reality Check 7:35PM (1/18/2008)
How do you know anything about either company? What did anyone expect on a complicated deal, has anyone heard either company complain? Pension liability in England is very different from here they love taxes to the point of closing compainies.... and they will just for spit.
drstrangegun 12:47PM (1/18/2008)
Tata will go home at the end of the day amazed that any American automotive company still functions today, given the level of internal and external bureaucracy involved.
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MK 12:52PM (1/18/2008)
I see what's being said here, but I tend to think Tata didn't go into this blindly. Just because this is news to us, doesn't mean it is to them.
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akatsuki 1:07PM (1/18/2008)
Basically it seems Ford wants to keep sticking its engines in Jags and LRs and doesn't want Tata to build them itself or look around for other strategic partners.
Tata should tell them to take a hike. Ford needs the money for Jaguar and LR, Tata doesn't need Jag really, they could always buy another retired luxury brand at worst case.
@John P.- As for Tata buying Jag and the rep, most of the Brits I know are much happier about an Indian owner than an American one. Indian anglophilic tendencies tend to be pretty strong and very traditional, so they generally do a good job with English brands when they acquire them.
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John 1:59PM (1/18/2008)
I'm amazed at all the knowledge available from you and fellow bloggers ("cowboy bob" re complex transitions, Mr. Oak's" insight on pimping, "YouKNow ImRight's" insight on Ford's thinking, and "Eric L" again with the pimping knowledge. Maybe you should incorporate and sell your services to Tata.
But I would consider the following points when you advise Tata. Jacques Nasser screwed Ford with his empire building plans for high end cars. That was wrong for Ford and Ford is now trying to clean up the mess Nasser made for Ford, LR, and Jaguar. If the LR and Jaguar brands are going to survive, it is not likely to be within Ford.
It is becoming apparent that Cerberus did not exercise proper due diligence in their deal with Daimler, and Chrysler is now at greater risk of failing as an independent company. It is possible that Ford is making the 15-20 "issues" visible now to ensure Tata knows and can make the correct business decision on what to do about them. I would certainly trust Bill Ford's organization to deal with Tata more honestly than the way Chrysler was treated. I would also trust Ford not to give away the farm in order to make this deal. They are struggling don't you know.
Oh, and by the way, with Ford cars being one of the most popular and respected in GB, your comments about ALL of your British acquaintances preferring Tata vs America does not sound very convincing.
Mr. Oak 2:44PM (1/18/2008)
Jan: Mr. Oak also answers to the name "Silky". That's what my Hoes call me.
Amit 1:12PM (1/18/2008)
This is funny....wonder what was TATA thinking??
http://livbit.com
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YouKNow ImRight 5:38PM (2/11/2008)
Naive to think Fords going to change its ways.
It is overburdened with just the complicated assessment & advisors stated.
It needs to focus on its own business and stop having its hand in every pie. Thats how it messed up in the first place.
Stick to building great cars & dont complicate the auto industry so much , that we as consumers get cookie-cutter gas guzzling machine which set the standard for the future.
Sales do not construe as respect and admiration for products. Sometimes its just needs, sometimes whats dished out.
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