Tata Motors on March 26 acquired Ford''s British marquees Jaguar and Land Rover for 2.30 billion dollars in an all cash deal, sealing a deal that it pursued for nine months. Under the deal, Tata will continue to source engine from Ford, which would be paying about 600 million dollars toward the pension liabilities of Jaguar-Land Rover employees. As part of the transaction, Ford will continue to supply Jaguar and Land Rover for differing period with powertrains, stampings and other vehicle components in addition to a variety of technologies such as environmental and platforms. Ford has also committed to providing engineering support, including Research and Development plus information technology, accounting and other services.
In addition, Ford Motor Credit Company will provide financing for JLR dealers and customers during a transitional period, which can vary by market, for up to 12 months. The deal would be funded through a mix of existing cash reserves and new debts. Recently, Tata Motors had announced that its Board has approved raising of Rs 4000 crore (about one billion dollar) from either overseas or domestic markets through issuance of securities. The company had said the funds to be raised would be utilised to part finance overall funding requirement to meet some of its strategic plans. Stating that its expansion plans through organic route over the next 3-4 years might incur expenditure; the company said the acquisition opportunities have to be financed upfront. The acquisition by the Tatas saves up to 40,000 British jobs. While the three Jaguar and Land Rover factories in Britain employ 16,000 people, the number swells to around 40,000 when ancillary units are taken into account, according to Andrew Dodgson of Unite.
The only question mark that surrounds the acquisition is one posed by some industry watchers in the US - over the branding of the two luxury brands, given that Tata Motors have unveiled the Nano, the world''s cheapest car, this year. Tata Motors is India''s largest automobile company, with revenues of $7.2 billion in 2006-07. With over 4 million Tata vehicles plying in India, it is the leader in commercial vehicles and the second largest in passenger vehicles. In the past few years, the Tata group has led the growing appetite among Indian companies to acquire businesses overseas in Europe, the United States, Australia and Africa - some even several times larger - in a bid to consolidate operations and emerge as the new age multinationals.
In addition, Ford Motor Credit Company will provide financing for JLR dealers and customers during a transitional period, which can vary by market, for up to 12 months. The deal would be funded through a mix of existing cash reserves and new debts. Recently, Tata Motors had announced that its Board has approved raising of Rs 4000 crore (about one billion dollar) from either overseas or domestic markets through issuance of securities. The company had said the funds to be raised would be utilised to part finance overall funding requirement to meet some of its strategic plans. Stating that its expansion plans through organic route over the next 3-4 years might incur expenditure; the company said the acquisition opportunities have to be financed upfront. The acquisition by the Tatas saves up to 40,000 British jobs. While the three Jaguar and Land Rover factories in Britain employ 16,000 people, the number swells to around 40,000 when ancillary units are taken into account, according to Andrew Dodgson of Unite.
The only question mark that surrounds the acquisition is one posed by some industry watchers in the US - over the branding of the two luxury brands, given that Tata Motors have unveiled the Nano, the world''s cheapest car, this year. Tata Motors is India''s largest automobile company, with revenues of $7.2 billion in 2006-07. With over 4 million Tata vehicles plying in India, it is the leader in commercial vehicles and the second largest in passenger vehicles. In the past few years, the Tata group has led the growing appetite among Indian companies to acquire businesses overseas in Europe, the United States, Australia and Africa - some even several times larger - in a bid to consolidate operations and emerge as the new age multinationals.
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