Tata to Buy Ford Brands for $2.3 Billion

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 theend of the next quarter, subject to regulatory approvals, they said.

"We have enormous respect for the two brands and will endeavor topreserve and build on their heritage and competitiveness, keeping theiridentities 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-largestcar maker, has been in talks with Ford since it was chosen as thefront-runner to buy British-based Jaguar and Land Rover a few days into2008.

Ford, which lost $2.7 billion in 2007 and $12.6 billion in 2006, isselling Jaguar and Land Rover to focus on turning around itsloss-making operations in North America.

"Now, it is time for Ford to concentrate on integrating the Fordbrand globally, as we implement our plan to create a strong Ford MotorCompany," 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 fundthe deal, and how the global, marquee brands would fit into its stableof trucks, buses and passenger cars, including the $2,500 Nano, theworld’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 ofthe 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 possibledowngrade in January from its current high-yield "BB+" rating, citingthe potential increase in its debt load from the acquisition of thevenerable Jaguar and Land Rover brands.

Tata Motors, which has a market value of $6.5 billion, is a memberof the Tata Group, which comprises 98 companies in various sectorsincluding steel, salt, software, energy, cars and trucks,communications and chemicals.

The Tata Group has made a number of overseas takeovers in recentyears, including last year’s $13 billion buy of Anglo-Dutch steelmakerCorus by Tata Steel Ltd.

(For in depth coverage of Jaguar/ Land Rover sale, click on: here)

(Editing by John Mair and Quentin Bryar)