India’s Tata buys Jaguar and Land Rover

Thousands of workers at Jaguar and Land Rover plants are expected to be told on Wednesday that the marques have been sold to the Indian conglomerate Tata.

It is understood that a deal between Tata and Ford over the sale of two of the best known names in British car making was concluded on Tuesday night after months of painstaking negotiations.

Ford refused to confirm a deal had been signed on Tuesday night, saying any significant development had to be communicated to employees first. However, formal confirmation that the two sides have reached agreement is expected via simultaneous announcements in India, Britain and the US at around noon GMT on Wednesday.

The companies have been in detailed negotiations for almost three months after Tata emerged as the leading bidder, ahead of rivals One Equity, a private equity concern, and automotive group Mahindra and Mahindra.

On Tuesday the two sides were refusing to be drawn on reports from India that Tata had agreed to pay $2,65-billion for the marques. Reuters quoted a source close to the deal as saying: ”That figure of $2,65-billion is highly unlikely. You have to come south from that by quite a bit.”

Neither side has ever commented on the likely size of the deal. Initial industry estimates suggested a figure of between $1,3-billion and $1,5-billion, though there is increasing speculation that the final figure may be around $2-billion.

Ford has not commented on the detailed financial performances of the two marques. Land Rover has clocked up record sales in each of the last three years and is estimated to have made about $1-billion in the last financial year, while Jaguar is understood to have curbed earlier losses.

Sources close to the talks have indicated that negotiations have been protracted, not because of haggling over the price, but because of the need to negotiate supply contracts under which Ford would continue to provide engines for both marques.

Pensions and job security have also been cited as issues.

There had been speculation that Ford might want to keep a stake in Jaguar and Land Rover to protect its commercial position, but that suggestion has been largely discounted.

Land Rover and Jaguar employ about 16 000 people. Jaguars are manufactured at Castle Bromwich in the West Midlands and Halewood on Merseyside on a production line shared with Land Rover, which also manufactures at a plant in Solihull.

Tata, which owns the Anglo-Dutch steel maker Corus, and Tetley Tea, is the bidder favoured by the trade unions, but they will be looking for assurances over investment, plant and job security.

At the Geneva motor show this month, Tata’s head, Ratan Tata, said he planned to keep ”the image, touch and feel”, of the two marques. ”There is no reason to tinker with the brands. Our challenge is to make them grow.”

Jaguar and Land Rover are part of Ford’s premier automotive group, which last year sold the Aston Martin marque for £450-million to a Middle east-backed consortium.

Under Tata, Jaguar and Land Rover are expected to stick to existing business plans for the next few years, with the headquarters operation remaining in Britain.

Acquisition of the UK marques will mark a significant expansion of the Indian company’s car-making capability, which includes models such as the Indica, Indigo, Sumo Grande and the recently launched ”people’s car”, which sells for a little over £1 000. – Â

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