Tata Motors acquire Jaguar Land Rover for US$ 2.3 billion

After nine months of negotiation, Tata Motors has finally signed a deal to buy luxury brands Jaguar and Land Rover (JLR) from Ford Motor for $2.3 billion in cash, the largest acquisition by an Indian company in the automobile business. The purchase price is less than half what Ford paid ($2.5 billion each) to acquire the two brands. Ford bought Jaguar in 1989 and Land Rover from BMW in 2000.

There are about 16000 employees on rolls of JLR. Hence, Ford will contribute about US$ 600 million towards Jaguar Land Rover pension plans. The definite agreement brings brands, plants and Intellectual property rights of JLR. The agreement provides for Ford to continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components.

Ford will also supply a variety of technologies, such as environmental and platform technologies. It has committed to provide engineering support, including research and development, plus information technology, accounting and other services. As a transition arrangement, Ford Motor Credit Company will continue to provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.

The deal is a fulfillment of Mr Tata’s personal vision and is intended to catapult Tata Motors into the global big league of auto majors. It will also reinforce the global perception of India Inc as a leader in international business, and not just in IT. The acquisition also marks Tata Motor’s leap forward into the global higher end luxury car segment.