Jaguar and Land Rover, British motorings two best brands, sold first to the American company Ford Motors have once again changed hands. Tata Motors, who made the very small car Nano for their home country of India, have bought these British brands for £1 billion.
Interestingly Tata Motors is a group company of the parent Tata Sons, which has been doing business in India for more than a century! And in the last few years this group has started to expand globally——Tata Tea bought another British brand Tetley in the year 2000, another group company Indian Hotels is trying to acquire the American hotel chain Orient Express, while last year Tata Steel paid $13 billion for the Anglo-Dutch Corus Group.
In fact over the last eight years the Tata Sons group companies have made 35 overseas acquisitions, including coal and iron ore mines, totalling $17.79 billion. Tata Motors got the British brands, Jaguar and Land Rover, fairly cheap at the price of $2.3 billion. Because Ford itself had paid $2.5bn to acquire Jaguar in 1989 and $2.7 billion for Land Rover in 2000!
Moreover both brands have come out with exciting new cars, the Jaguar XF (pictured above) and the Land Rover's LRX Concept.
So why is Ford selling?
It is short of cash, having suffered global losses to the tune of $2.7 billion in 2007 and a whopping $12.6 billion in 2006! Ford had already sold another British band, Aston Martin last year as it tried to cover those losses....it now retains only the Volvo brand.
But Tata Motors itself is not in such rosy shape after buying the two British brands. When the deal was first announced a month or two ago, Tata Motors shares had a market worth of $5.9 billion, having fallen 20%. Tata Motors also needs capital to help pay for the manufacture of its Nano, the world's cheapest car, due for launch in the second half of this year.
So the company mandated the State Bank of India to raise $3 billion in overseas debt, to be pooled by Citibank, Standard Chartered, BNP Paribas, JP Morgan, Bank of Tokyo-Mitsubishi UFJ and Mizuho Financial Group.
What does Tata hope to get from spending cash on these British brands? The big fear among common Britons that jobs would be lost or that the plants would be shifted overseas have been put to rest. Tata Motors has decided to retain manufacturing in Britain, has an agreement with Ford over job and pension guarantees for British workers.
The Chairman of Tata Sons, Ratan Tata, seen here with his baby the Nano said, "We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact."
So what do Tata get out of this deal? If the cars will be manufactured in Britian how will they sell in India? Or is Tata in it for all technology and development that has gone into these two British brands?