M&M may drop out of bid for Ford brands

15 September, 2007

Mahindra & Mahindra is pulling out its bid to take over the high-profile Ford brands Land Rover and Jaguar. The Mahindras are said to have been mulling over opting out as Jaguar and Land Rover would have to depend on Ford for powertrains even after the deal and it was concerned about emission norms that would be enforced in Europe in 2012.

Meanwhile, another Indian major Tata Motors is still going ahead with its plans to bid for the Ford brands. Rumor has it that Italian major Fiat was ready to provide technical support to Tata Motors if the Indian company was interested in the Land Rover and Jaguar sale.

Ford plans to have more details on the sale of Jaguar and Land Rover by the end of the year or early 2008. It is believed that the recent upswing in the global financial markets has spurred the Tatas to bid for the two brands. The parent, Ford, which lost $12.7 billion in 2006, has been looking to sell its Jaguar and Land Rover units and the deal is now expected to close either late this year or early in 2008.

If the Tatas win the bid, it will establish its presence in the global arena. The Indian auto market currently accounts for more than 90 per cent of Tata’s sales. A report quoting chairman Ratan Tata said that Jaguar and Land Rover could help expand Tata Motors unit's footprint around the world. The takeover is expected to help build Tata Motors’ scale and give it a global reach.

At least three private equity groups, Cerberus Capital Management LLC, Ripplewood LLC, and One Equity Partners LLC also have expressed an interest in Jaguar and Land Rover.

The Tata Group has its presence in almost all industry segments including automobiles, steel, and software. The group had recently been noticed in the global space when group company Tata Steel invested $12 billion to acquire Britain-based Corus Steel.