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Tata Motors buys Land Rover and Jaguar for £1.15bn |
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The long anticipated sale of Land Rover and Jaguar to Tata Motors of India has now been confirmed. The sale finally weighed-in at £1.15bn, just over three months after negotiations began in January this year when Ford declared Tata to be the preferred bidder. Since Ford’s announcement in June 2007 to sell Land Rover and Jaguar, Tata has beaten bidders Mahindra and Mahindra and One Equity Partners to the table partly because they were the most likely to be able to raise the funds needed. Eventually, the loans they have secured, reportedly from nine different banks, has totalled £1.5bn. The multinational conglomerate, which comprises of 98 companies including Tetley Tea, British Steel (now Tata Steel) and Concord Engines, will use the remaining total of the loan as working capital.
As Ratan Tata, chairman of the Tata Group, |
explained to Autocar, the reason he wants to own Land Rover and Jaguar is because “these are two iconic brands, global in nature and highly respected.” Keen to reassure that the look and feel of the brands will not change too much he stated: “They are British brands, and they should remain British.”
Although he doesn’t currently own a Land Rover vehicle he seems to understand the depth of feeling we have about these vehicles and doesn’t seem to want to do anything other than provide a nurturing environment for Land Rover to thrive. With a proven history of keeping the existing management in place at other companies bought by Tata, he seems committed to follow the same pattern with Land Rover and Jaguar. Ratan explains: “We aim to put our imprint on the company through a negotiation board, but the existing managers run the company.” |
With a commitment in place to stick to the five year investment plans for the UK factories and the hard-won deal to continue to use Ford-supplied engines and spares, the UK position is looking strong. Indeed, Ratan has stated: “Tata wants to be an international car company” which should help to alleviate any butterflies still lurking around the UK workforce. With the sale expected to be finalised before the end of next quarter (subject to various regulatory approvals) the transition should be further smoothed by Ford Motor Credit Company continuing to provide financing for Land Rover and Jaguar dealers and customers for up to 12 months.
The main challenge for the future of Land Rover is balancing the need for fuel-efficient technology against keeping the costs to the consumer under control. |
There is also the wider challenge of regaining some of the global off-road markets, indeed, our own Mac Mackenny expresses in next month’s LRM: “I wish they would remember their roots and get back to the simpler days. This is especially so for the Defender, which the British Army are already starting to turn their back on. They won’t accept the Td5 engine, deeming it too technical, and the Special Forces groups have started to move over to the Supacat HMT (High Mobility Transport) in preference to the Defender.
“From my travels around the world, you rarely see Land Rovers; it’s all Toyotas these days. Land Rover commands only about five percent of the market share and that is a crying shame since they led the way in vehicle operations destined for remote and hazardous locations.” |
We’ll add information as we get it so continue to watch this space for further information about the Tata deal.. |
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The Tata Group |
The Tata Group was founded by Jamsetji Tata in the mid 19th century and today comprises 98 companies, in seven business sectors. The Group is based in Mumbai, India, and owns many well known brands, including Tetley Tea.
The Automotive Sector includes:
Concorde Motors
Telco Construction Equipment
TACO Hendrickson Suspension Systems
Knorr Bremse Systems for Commercial Vehicles
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The Group employs 289,500 people, and has operations in 80 countries, over six continents.
It has a shareholder base of over 2.9 million and market capitalisation of $56.52 billion as on March 19, 2008.
Revenues in 2006-07 amounted to $28.8 billion, which is the equivalent of about 3.2 per cent of India's GDP. |
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Comments |
"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."
Alan Mulally, president and CEO, Ford Motor Company: "Jaguar and Land Rover are terrific brands. 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."
Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors: "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."
Bill Campbell, Chairman of the South London and Surrey Land Rover Club – organisers of the Londond to Brighton Run: “We’re slightly conc erned about Tata’s takeover. Ford’s takeover was like a breath of fresh air; they forged real links with the clubs and for the first time ever, Land Rover took real notice of the people who used their products. Our fear is that vehicles will be shipped in kit form to India for assembly, thus losing the Solihull plant. I just hope it all works out. They could vertainly do with an injection of cash, though they’re riding high on new products right now, with the new Jaguar and the potential production of the LRX.”
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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. 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."
Ben Duckworth, Duckworth Land Rover: We’re really excited about the sale, as it brings new investment. We’re looking forward to that, and future new products and all the opportunities that the deal with Tata brings.”
Steve Gowing: (personal view, not that of the club): “I haven’t really thought about it, it hasn’t been English for so long now. Will they take the Defender back to its roots; will they make the ‘for export only’ 300Tdis available here? That’s what I’d like to see - they make them for the army and for the African continent, we have farmers here too! Either it’s important to cut emissions or it’s not; so if the 300Tdi argument is this, does Africa’s environment not matter? I’d like to think that Tata will go down that line. I don’t care who owns Land Rover as long as we get proper Land Rovers back.”
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