Tata buys Jaguar, Land Rover for $2.3 billion

27 March, 2008

Tata Motors has clinched the deal to pocket Ford Motor Co’s prestigious brands Jaguar and Land Rover. The deal is to be funded through a bridge finance facility along with the company's existing cash resources.

Tata Motors has agreed to buy the Jaguar and Land Rover brands from Ford Motor Co for a cash deal of US$2.3 billion. Jaguar and Land Rover will operate as subsidiaries under holding company Tata Motors (UK) Holdings Ltd. The two brands employ about 16,000 people at plants in the West Midlands and Merseyside in the UK.

A financial news report pointed out that the Tatas would raise US$3 billion for a period of 15 months as bridge finance from a small syndicate of banks, which will be refinanced through long-term debt or equity or unlocking value from some of its investments in various units.

The agreement will be complete by the end of the second quarter of 2008. Though the brands have become Tata property, the relationship with Ford will not end. Ford will continue to supply Jaguar and Land Rover with vehicle components and environmental and platform technologies and will also provide financing for dealers and customers through Ford Motor Credit Co. The US major will also contribute about US $600 million to the Jaguar Land Rover pension plans.

The Ford brands were facing an uncertain future at the time of the deal. The buy is believed to have removed the uncertainty that has distracted the management, employees and customers of both companies.