Ford has issued a press release confirming that it has sold both Jaguar and Land Rover to Tata Motors for an approximate price of $2.3 billion, which comes under some numbers as high as $2.65 billion that were being tossed around yesterday. The rumor that Ford will contribute to pension funds associated with the brands is also true, as it confirmed that $600 million will be dropped into the retirement coffers of the brands once the deal closes. It is, of course, subject to regulatory approval in a number of countries, but the automaker expects the deal to be done by the end of the following quarter. As part of the deal, Ford will continue to supply powertrains, stampings and other unnamed vehicle components to Tata for "differing periods", as well as R&D research, environmental and platform technologies, and even accounting services, among others. Clearly the ties that bind Jaguar Land Rover to Ford are strong and will take some time to undo. Judging from the press release, it seems all parties involved, including the employees of Jaguar Land Rover, are pleased with how the deal went down, and for the time being both brands will be run business as usual during the transition period.
[Source: Ford]
PRESS RELEASE
FORD MOTOR COMPANY ANNOUNCES AGREEMENT TO SELL JAGUAR LAND ROVER TO TATA MOTORS
DEARBORN, Mich., March 26, 2008 – Ford Motor Company [NYSE: F] announced today that it has entered into a definitive agreement to sell its Jaguar Land Rover operations to Tata Motors.
The transaction is the culmination of Ford's decision last August to explore strategic options for the Jaguar Land Rover business, as the company accelerates its focus on its core Ford brand and "One Ford" global transformation.
The sale is expected to close by the end of the next quarter and is subject to customary closing conditions, including receipt of applicable regulatory approvals.
The total amount to be paid in cash by Tata Motors for Jaguar Land Rover upon closing will be approximately US $2.3 billion. At closing, Ford will then contribute up to approximately US $600 million to the Jaguar Land Rover pension plans.
"Jaguar and Land Rover are terrific brands," said Alan Mulally, president and CEO, Ford Motor Company. "We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all."
"This is a good agreement. It provides the Jaguar Land Rover management team and employees with the assurances needed to maintain their focus on delivering the best results for the business," said Lewis Booth, executive vice president, Ford Motor Company, who has responsibility for Ford of Europe, Volvo and Jaguar Land Rover. "I am confident that, under its new owner, Jaguar Land Rover will continue to build upon the significant improvements and product successes it has achieved in recent years."
As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.
In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.
The parties believe these arrangements will support Jaguar Land Rover's current product plans, while providing Jaguar Land Rover freedom to develop its own stand-alone capabilities in the future that will best serve its premium manufacturer requirements.
The parties do not anticipate any significant changes to Jaguar Land Rover employees' terms of employment on completion.
Speaking about today's agreement, Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors, commented: "We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business."
Jaguar Land Rover's employees, trade unions and the UK Government have been kept informed of developments as the sale process progressed and have indicated their support for the agreement.
Speaking on behalf of Jaguar Land Rover, Geoff Polites, chief executive officer, said: "Jaguar Land Rover's management team is very pleased that Ford and Tata Motors have come to an agreement today. Our team has been consulted extensively on the deal content and feels confident that it provides for the business needs of both our brands going forward.
"We have also had the opportunity to meet senior executives from Tata Motors and the Tata group," Polites continued. "They have expressed confidence in the team that has delivered significant improvements in Jaguar Land Rover's business performance. We feel confident that we can forge a strong working relationship with our new parent company, and we look forward to a bright and successful future for Jaguar Land Rover."
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Reader Comments (Page 1 of 2)
DJ @ Mar 26th 2008 10:51AM
So, based on Ford's release, the engine and powertrain plants that build the AJ-V8 and it's brethren will remain with Ford and they will continue to supply not only Jag and LR under this sale, but Aston under the previous sale. Also sounds like Ford keeps the it's aluminum stamping technology for future vehicles.
Tinu @ Mar 26th 2008 1:05PM
Great to see an Indian company buying two iconic companies!
f3rg @ Mar 26th 2008 10:53AM
w00t.
So, how long 'til Tata realizes their mistake and tries to sell it to someone else.
BTW: Tata. Best car brand name ever.
Avinash machado @ Mar 26th 2008 11:10AM
The sun has finally set on the British (Automotive) Empire.
rndmnme @ Mar 26th 2008 11:14AM
You assume it actually rose to begin with.
Spice @ Mar 26th 2008 11:33AM
Mahatma Gandhi is laughing now at the Brits!
Everett @ Mar 26th 2008 11:34AM
Somewhere, Gandhi just giggled...
jamie @ Mar 26th 2008 11:40AM
Nice Tatas. :(
Speedzzter @ Mar 26th 2008 11:53AM
Unlike Ford's unnecessary fire sale of Aston Martin, it was past time for FoMoCo to spin off the Mangy Cat and its aging off-road Dog (Rover, Rover come over).
It's just too bad that FoMoCo had to spend so many precious development dollars to learn of and extricate themselves from the mistake.
(Of course, considering that the entirety of Ford itself is apparently only worth less than a third of what it once was, the "bargain" price is not altogether surprising)
But that's insignificant compared to the huge sums of intellectual and monetary capital that FoMoCo wasted on its "English Patients."
http://speedzzter.blogspot.com/2008/03/ta-ta-mangy-kitten-and-dog.html
ken_aisin @ Mar 26th 2008 12:13PM
What a day for the British auto industry.... being colonised by the Hindus.... I guess what goes around, comes around.... haha
DesiAuto @ Mar 26th 2008 1:13PM
It is always a good news when you start buying businesses of the country which occupied your country once. I hope more Indian businesses follow suit.
One of the best non-violent ways to take over.
BTW, I suggest Tata to throw these companies away quickly if ROI doesn't work out.
ken_aisin @ Mar 26th 2008 4:19PM
"It is always a good news when you start buying businesses of the country which occupied your country once. I hope more Indian businesses follow suit."
Unfortunately, the sale to Tata makes me even more hesitant to buy Jaguars and Range Rovers in the future.
On the other hand, the sale of Aston Martin to Dave Richards and Co. made me desire Aston Martin a lot more than before.
"BTW, I suggest Tata to throw these companies away quickly if ROI doesn't work out."
With this complicated contract between FoMoCo and Tata, it'll be very difficult for Tata to dump the brands in the near future.
Oracle Joe @ Mar 26th 2008 1:31PM
...but, sadly, we`ll never see Jaguar and Land Rover again because of this. So, in effect, the Brits will have the last laugh on the Hindustani at the expense of us all, the consumers. 8(
Richard S. @ Mar 26th 2008 1:40PM
Mr. Tata better be able to afford the billions of dollars that will be needed to resurrect Jaguar. Unless he plans to mass produce Jaguars in India and hope that buyers don't ask for the country of origin, I don't see any short-term gain.
Jaguar/Land Rover would have been better off under Honda. They have more cash and engineering resources. Besides, getting Jaguar means getting a RWD platform and access to a modern V-8 engine. That alone would mitigate most of the purchase price. Honda then could have blended its excellent engineering with Jaguar's mastery of luxurious design. Put some Honda guys in charge of production to kink out quality problems and you have a great luxury brand able to go against BMW and Mercedes.
DesiAuto @ Mar 26th 2008 1:50PM
Snips from BW article:
"Tata might in fact improve the prestige of these brands by spending more on marketing than Ford did. They might have the money to invest in research and development too so that these ranges are more high design/high performance," says Allyson Stewart-Allen, director of International Marketing Partners, a London consulting firm.
That seems to be the game plan being written by Tata Chairman Ratan Tata (BusinessWeek.com, 8/2/07), a car enthusiast who sits on the board of Italian automaker Fiat (FIA.MI) and has said he also wants to own part of Ferrari. "Our plan is to retain the image, the touch, and the feel of Jaguar and Land Rover," Tata said at the Geneva Auto Show last month. "We will not tinker with the brands in any way… they are special global brands and whoever acquires them has a responsibility to nurture them and enable them to prosper."
link: http://www.businessweek.com/bwdaily/dnflash/content/mar2008/db20080325_325999.htm?chan=top+news_top+news+index_top+story
vLane @ Mar 26th 2008 2:21PM
Everyone knew Jaguar's been bleeding red ink for at least two decades now, but has Land Rover ever been profitable? BMW sure was relieved to unload that crap onto Ford back in 2000 after years of losses...
With all the British garbage gone, the Ford family is suddenly a winning one: Mazda and Volvo. Hold on to them.
trevor2k @ Mar 26th 2008 2:43PM
I, for one, welcome our new Hindu overlords.
* I guess no more steak at the corporate bbq's?
trevor2k @ Mar 26th 2008 3:33PM
"...it is part of Hindu tradition to avoid the consumption of beef." - Wikipedia
http://www.religionfacts.com/hinduism/things/cow.htm
Yes, I was making a joke at a TRUE stereotype. Pull the knickers down a little, they seem to be riding up a bit.
DesiAuto @ Mar 26th 2008 3:12PM
" I guess no more steak at the corporate bbq's?"
Why?
Lot of Hindus love steak, especially if it is grilled with proper spices.
BTW, there is nothing in hinduism that bans meat. Every hindu is free to make his/her own choices in all matters.
ken_aisin @ Mar 26th 2008 4:22PM
I think Tata wants these two brands so badly that it doesn't seem like a fair deal. Great job to FoMoCo for finally dumping these two burdens for such a sweet deal.
Next one should be Volvo, which hasn't brought in any profit in 6 years....