It's official. Well almost. Ford Motor Company on Thursday stopped short of handing over the keys of iconic British car brands Jaguar and Land Rover to Tata Motors. The two players confirmed that they will now proceed towards advanced negotiations, effectively indicating that the other two bidders — Mahindra & Mahindra (with Apollo) and US private equity firm One Equity Partners — are no longer in the race.
In a statement, Lewis Booth, executive V-P, Ford of Europe and Premier Automotive Group (PAG), said: "Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business. There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned."
An internal memo sent to the workers at the Jaguar and Land Rover plants, stated, "There are also crucial issues around wages, terms and conditions and pensions to address before any final decision is considered." Company officials in Ford say with this statement Tata Motors can be considered as the ‘preferred bidder' for the deal — though Ford has not said so in the official statement as a final announcement is still some weeks away. The auto major has also asked the company's union not to speak publicly on the matter as "it is confidential" and should not be discussed with the media.
Tata Motors, on its part, said: "We are pleased by the progress in the discussions to date and very positive about the prospects of this business going forward." While neither side specified a timeframe for a clear announcement, sources said that the deal should be through in the current quarter.
Key officials from the Tata group — Ratan Tata, chairman; Arun Gandhi, director at Tata Sons, known for spearheading Tata's battle for Corus; Praveen Kadle, former Tata Motors' finance head and now managing director of Tata Capital, and Ravi Kant, managing director, Tata Motors — are leading the discussions for the group. JP Morgan and Citigroup are advising Tatas on this deal. "Both Tata Motors and Tata Sons will pump in funds for this deal and investment will be done through a special purpose vehicle," sources said. The Tatas are unlikely to opt for a leveraged buy out, as they had done for the Tetley and Corus deal.
Sources said, "Everything, including the pricing, is on the table for discussions. However, one of the things that the Tatas have assured Ford is that it will not be laying off any employees from the two firms. This has found favour from the labour unions of the two companies, who has supported the Tata bid."
While Tatas have submitted a bid for $2.05 billion, M&M quoted $1.9 billion to drive the two brands home. Interestingly, in 2000, Ford paid 1.8 billion pounds to buy Land Rover, known to build some of the toughest and safest sports utility vehicles on the planet. Jaguar, which boasts of ultra-luxury sedans and sports coupes, joined PAG in 1989, when Ford bought it for $2.3 billion.
While Land Rover has been witnessing unexpected demand, Jaguar is struggling to get back into the black ever since Ford took over. The parent company was keen on selling the two brands as a pair, warding off a few potential bidders, who were interested in the utility vehicle maker only.
After selling off Aston Martin in June, Ford sent feelers that it was ready to hand over two more brands from its Premier Automotive Group — Jaguar and Land Rover. It has been shedding loss-making marquee brands in an attempt to salvage operations, which have been hit by high petrol prices, labour costs and competition from the Japanese carmakers. The company reported a $12.6 billion loss for the year ended 2006.
In a statement, Lewis Booth, executive V-P, Ford of Europe and Premier Automotive Group (PAG), said: "Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business. There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned."
An internal memo sent to the workers at the Jaguar and Land Rover plants, stated, "There are also crucial issues around wages, terms and conditions and pensions to address before any final decision is considered." Company officials in Ford say with this statement Tata Motors can be considered as the ‘preferred bidder' for the deal — though Ford has not said so in the official statement as a final announcement is still some weeks away. The auto major has also asked the company's union not to speak publicly on the matter as "it is confidential" and should not be discussed with the media.
Tata Motors, on its part, said: "We are pleased by the progress in the discussions to date and very positive about the prospects of this business going forward." While neither side specified a timeframe for a clear announcement, sources said that the deal should be through in the current quarter.
Key officials from the Tata group — Ratan Tata, chairman; Arun Gandhi, director at Tata Sons, known for spearheading Tata's battle for Corus; Praveen Kadle, former Tata Motors' finance head and now managing director of Tata Capital, and Ravi Kant, managing director, Tata Motors — are leading the discussions for the group. JP Morgan and Citigroup are advising Tatas on this deal. "Both Tata Motors and Tata Sons will pump in funds for this deal and investment will be done through a special purpose vehicle," sources said. The Tatas are unlikely to opt for a leveraged buy out, as they had done for the Tetley and Corus deal.
Sources said, "Everything, including the pricing, is on the table for discussions. However, one of the things that the Tatas have assured Ford is that it will not be laying off any employees from the two firms. This has found favour from the labour unions of the two companies, who has supported the Tata bid."
While Tatas have submitted a bid for $2.05 billion, M&M quoted $1.9 billion to drive the two brands home. Interestingly, in 2000, Ford paid 1.8 billion pounds to buy Land Rover, known to build some of the toughest and safest sports utility vehicles on the planet. Jaguar, which boasts of ultra-luxury sedans and sports coupes, joined PAG in 1989, when Ford bought it for $2.3 billion.
While Land Rover has been witnessing unexpected demand, Jaguar is struggling to get back into the black ever since Ford took over. The parent company was keen on selling the two brands as a pair, warding off a few potential bidders, who were interested in the utility vehicle maker only.
After selling off Aston Martin in June, Ford sent feelers that it was ready to hand over two more brands from its Premier Automotive Group — Jaguar and Land Rover. It has been shedding loss-making marquee brands in an attempt to salvage operations, which have been hit by high petrol prices, labour costs and competition from the Japanese carmakers. The company reported a $12.6 billion loss for the year ended 2006.