The Telegraph
Since 1st March, 1999
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Tatas hot on Ford marque trail

New Delhi, July 18: Automobile maker Tata Motors is reportedly evaluating a bid for Jaguar and Land Rover — the two premium marques that Ford Motor Co is putting on the block.

Spokespersons for both companies, however, declined to comment on the development. “Tata Motors has no comment to make,” said company spokesman Debasish Ray. “This is mere speculation and we do not comment on speculation,” said the Ford Motor India spokesperson.

The Tata group has been involved in major overseas takeovers in recent times, including the £6.7-billion acquisition of Anglo-Dutch steel company Corus through Tata Steel earlier this year.

Ford has been planning to sell its British luxury brands — part of its premier automotive group that includes Volvo — and has hired investment bankers Goldman Sachs, Morgan Stanley and HSBC to advise it on the sale.

The move to sell Jaguar and Land Rover stems from Ford’s desire to trim costs and offset losses on these businesses. Ford is in the middle of a massive restructuring after it reported a loss of $282 million in the first three months of 2007.

Sources said Tata Motors recently instructed advisers to start evaluating the merits of a joint offer for Jaguar and Land Rover. They said the Tatas could partner another car maker while making the bid.

Some reports suggest that Tata Motors is understood to have signed a confidentiality agreement with Ford in recent days.

Ford bought Jaguar for £1.6 billion in 1989, followed by the £1.7-billion purchase of Land Rover in 2000.

It also injected several million pounds in the two British companies: Jaguar has its plants in Coventry, Birmingham and Liverpool, while Land Rover has operations in the West Midlands and Warwickshire.

Auto analysts do not expect Ford to recover its investment in the two marques. Most estimate that Ford could get up to $2 billion for the two brands. Since Jaguar and Land Rover share parts and production facilities, selling them individually could be difficult, said analysts.

In March, Ford sold Aston-Martin, the British sports car maker, for $848 million to a group of investors headed by the racing mogul David Richards.

For Jaguar and Land Rover, there are several carmakers and some private equity firms who are in the race. Sources said Cerberus, a private equity firm that specialises in restructuring ailing companies, is the frontrunner for Jaguar and Land Rover because it would then have luxury brands to combine with Chrysler, which does not have a luxury division of its own.

Earlier this year, Cerberus had acquired the Chrysler group, part of DaimlerChrysler, for just under $7.5 billion.

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