Tata Motors today became the new owners of the luxury car berand Jaguar and the premium SUV Land Rover, divested by Ford Motor for $2.3 billion. In a statement Ford Motor announced the completion of the sale of its Jaguar Land Rover operations to Tata Motors, as a part of its operational turnaround efforts to cut losses and return to profitability.
"This is a momentous time for all of us at Tata Motors," Chairman of Tata Sons and Tata Motors, said in a statement. "Jaguar and Land Rover are two iconic British brands with worldwide growth prospects. Land Rover will retain their distinctive identities and continue to pursue their respective business plans as before. It is our intention to work closely to support the Jaguar Land Rover team in building the success and preeminence of the two brands.''
In August 2007, the US auto maker had announced that it would explore strategic options for its premium brands Jaguar and Land Rover.
After months of protracted negotiations, between Tata Motors and Ford, the two companies announced on 26 March that they had signed a definitive agreement for Tata Motors to acquire the two automobile brands with the manufacturing facilities for $2.3 billion and contributed about $600 million to the Jaguar Land Rover pension plans, as a part of the agreement wiith Tata Motors.
For Ford the sale has netted it far less that what it had paid to acquire the two brands - In 1999 Ford had bought Jaguar for $2.5 billion and a year later it paid $2.75 billion for Land Rover.
The purchase by Tata Motors includes the ownership by Jaguar and Land Rover of perpetual royalty-free licences of all necessary intellectual property rights, manufacturing plants, two advanced design centres in the UK, and worldwide network of national sales companies.
As part of the overall sale agreement between the two companies, Ford will continue to supply Jaguar Land Rover with engines, stampings and technology, including a range of environmental technologies. Other areas of transition support from Ford include IT, accounting and access to test facilities. Ford will also work with Tata Motors on the design and development through sharing of platforms and joint development of hybrid technologies and powertrain engineering.
Tata Motors is financing the acquisition by raising $1.7 billion from three rights issues and on completion of these issues, it would also raise a further $500-$600 million from an overseas equity issues.
Former chief financial officer David Smith, who took charge as acting chief executive officer of the brands on the death of CEO Geoff Polites, will be the new CEO of the business under Tatas. Smith has 25 years of experience with Jaguar Land Rover and Ford. Before recently returning to Jaguar Land Rover as its Chief Financial Officer, he was Director Finance and Business Strategy for PAG and Ford of Europe.
Tata was present at the handing over ceremony at the head quarters of Jaguar Land Rover at Gaydon in the UK along with Don Leclair, the executive vice president and chief financial officer of Ford Motor Company, and Lewis Booth, executive vice president of Ford Motor Company, with responsibility for Ford of Europe, Volvo and Jaguar Land Rover.
The Ford Motor Credit Company will continue to provide financing for Jaguar Land Rover dealers and customers for a transition period. Tata Motors is in an advanced stage of negotiations with leading auto finance providers to support the Jaguar Land Rover business in the UK, Europe and the US, and is expected to select financial services partners shortly.