Tata Finally Pounces On Jaguar And Land Rover
After months of negotiations, Tata has finally managed to buy off Jaguar and Land Rover from Ford in a 1 billion pound deal, which some speculate could be as high as 1.3 billion pounds. Tata has taken a 1.5 billion pound loan whereas Ford is expected to release around 600 million pounds into pension schemes for workers of Jaguar and Land Rover.
Tata's boss, Mr. Ratan Tata said that he saw no reason to tinker with the 2 brands and that the challenge was to make them grow. He reiterated that his plan was to maintain “the image, touch and feel” of the brands. The trade unions too had favored a Tata takeover, as the Tata group could have provided them assurances regarding their jobs. Jaguar and Land Rover have around 18,000 employees among them and Tata has planned to continue production in all the 3 factories at least till 2011 even as it implements its development plans. Ford had bought the British carmaker Jaguar for 2.5 billion dollars in 1989 and picked up Landrover for 2.73 billion dollars in 1990. Ford then proceeded to invest billions of pounds in its 2 acquisitions but while Range Rover is doing quite well and is posting profits, Jaguar is not financially healthy even as its cars get excellent technical reviews. But with Ford faltering in the US with losses mounting to 7.65 billion pounds during the past 2 years, there was pressure building up on its chief executive, Mr. Alan Mulally to part with these 2 companies. Ford, which had purchased premium British car maker Aston Martin in 1987 was also forced to sell the company for 450 million pounds to a middle east backed business group. Jaguars and Land Rovers are produced in factories situated in Merseyside, Halewood, West Midlands and Solihull.
On the other hand, Tata is the largest manufacturer of Trucks in India and also controls around 17% of the Indian car market with its models like Indica, Indigo, Sumo, Safari, etc. It has also announced that it will be producing the worlds cheapest car, the Nano, priced at 1,000 pounds from September 2008, in India. Tata also has a stake in Fiat in India, which now supplies engines for its cars and has also taken over factories of the defunct Korean company 'Daewoo' in Korea. Tata also owns Tata Tetley and had taken over the Dutch steel company Corus in the previous year. Tata was competing with rival Indian car maker Mahindra & Mahindra and a private equity company One Equity in its takeover bid for Jaguar and Land Rover. But even as Tata's bid to take over Jaguar and Land Rover seems to have succeeded it still facing difficulties with Ford over Ford's insistence to supply spares and engines to the 2 companies. There is also apprehension that after gaining control, Tata might shift some of the production to its other factories outside the UK and could also procure some of the components from abroad. Tata might have to clarify this matter with the 2 companies trade union representatives to ally their fear. With this acquisition, Tata has managed to lay its hands on the latest in Automotive technology and has also acquired the rights to Jaguar's and Land Rover's overseas distribution and sales network.
So, as Ford decides to sell of its 2 British companies in a bid to concentrate on its ailing US sales, Tata, which so far was known to manufacture economy cars in India will now have 2 feet firmly in the luxury car segment and the Indian car maker, which was desperately seeking to enter that segment will now have covered the entire spectrum right from manufacturing the world's cheapest 'peoples car' right up to some of the costliest cars and SUV's from Jaguar and Land Rover's stables.
Article written by: Craig Parker - Make Money Expert |
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