India's Tata Motors buys Jaguar and Land Rover from struggling American automaker Ford. MUMBAI (Reuters) - India's Tata Motors Ltd will buy luxury brands Jaguar and Land Rover from Ford Motor Co for about $2.3 billion in cash, the companies said on Wednesday.
The transfer of ownership to Tata Motors is expected to close by the
end of the next quarter, subject to regulatory approvals, they said.
"We have enormous respect for the two brands and will endeavor to
preserve and build on their heritage and competitiveness, keeping their
identities intact," Tata Motors Chairman Ratan Tata said in a statement.
Ford would contribute up to about $600 million to Jaguar/Land Rover pension plans, Tata Motors said.
Tata Motors, India's top bus and truck maker and its third-largest
car maker, has been in talks with Ford since it was chosen as the
front-runner to buy British-based Jaguar and Land Rover a few days into
2008.
Ford, which lost $2.7 billion in 2007 and $12.6 billion in 2006, is
selling Jaguar and Land Rover to focus on turning around its
loss-making operations in North America.
"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," Alan Mulally, Ford chief executive, said in the statement.
Shares in Tata Motors closed down 0.1 percent at 679.40 rupees in a Mumbai market that fell 0.8 percent.
INTEGRATION
Analysts have expressed concerns about how Tata Motors would fund
the deal, and how the global, marquee brands would fit into its stable
of trucks, buses and passenger cars, including the $2,500 Nano, the
world's cheapest car which it plans to begin selling later this year.
Tata Motors has announced plans to raise $4 billion of funding,
which is expected to help finance the Ford deal and the manufacture of
the Nano, which it unveiled in January.
The deal comes at a time when the credit-market crisis has raised borrowing costs and deterred deal-making across the globe.
Standard & Poor's placed Tata Motors on review for a possible
downgrade in January from its current high-yield "BB+" rating, citing
the potential increase in its debt load from the acquisition of the
venerable Jaguar and Land Rover brands.
Tata Motors, which has a market value of $6.5 billion, is a member
of the Tata Group, which comprises 98 companies in various sectors
including steel, salt, software, energy, cars and trucks,
communications and chemicals.
The Tata Group has made a number of overseas takeovers in recent
years, including last year's $13 billion buy of Anglo-Dutch steelmaker
Corus by Tata Steel Ltd.
(For in depth coverage of Jaguar/ Land Rover sale, click on: here)
(Editing by John Mair and Quentin Bryar)
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