Sunday, April 27, 2008
Tata buys Jaguar, Land Rover in $2.3b deal
Okay here is a story that I missed as it unfolded. India's TATA has bought Landrover and Jaguar! Why am I a little nervous about this shifting of economic power?
It now makes sense why the Ford stock is in the $6 range.
Ford lets go of luxury brands, hoping to stop growing losses
By Martin Desmarais
MUMBAI, India – Tata Motors snatched up Ford Motor Co.’s luxury brands Jaguar and Land Rover in a $2.3 billion deal – less than half of what Ford originally paid for the brands.
The bargain sell is viewed as Ford’s attempt to return to profitability in 2008 after losing $15.3 billion in 2006 and 2007. Industry insiders feel that the dropping demand for luxury vehicles – some Jaguars retail for as much as $80,000 – forced Ford’s hand on the deal.
Ford announced last August it was planning on exploring options for the Jaguar Land Rover business as it moved forward focusing on its “core Ford brand.”
When the deal closed late last month, Tata Motors agreed to pay $2.3 billion in cash on closing. Ford then agreed to contribute $600 million to Jaguar and Land Rover pension plans. The deal is expected to close in the next quarter.
Speaking publicly about the deal, Ford’s brass was outwardly positive.
“Jaguar and Land Rover are terrific brands,” said Alan Mulally, president and chief executive officer of Ford. “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.” More