Tatas may be sole bidder for Jaguar, LR

NEW DELHI: Tata Motors is inching closer to acquiring Jaguar and Land Rover. Sources in the know told DNA Money that the Tatas are the only serious bidder for the Jaguar-Land Rover (JRM) marquee now.

According to them, Mahindra & Mahindra is yet to put in a formal bid for the two brands.

Tata Motors is on a good wicket, because the other strong contenders, namely the who’s who of global private-equity firms, named as possible bidders, may also not pass muster.

Ford Motor Company, it seems, is keen on selling the two brands to dedicated car companies only, sources say.

Further, the labour unions of the two brands have consistently expressed fears of any private-equity buyers stripping the assets of Land Rover and Jaguar marquees and thus leaving its existing employees in the lurch. 

Sources say the Tatas have appointed Morgan Stanley as their merchant banker for the transaction and they may be ready to pay between $1.5-2 billion.

Interestingly, Ford mentioned an ongoing dialogue with the labour union of the two marquees for the first time on Thursday.

A company spokesperson said: “We are committed to ensuring that we maintain very close ongoing communications with our union colleagues during the process to determine the best future for Jaguar Land Rover and Ford Motor Company.”

He also indicated that any bidder would have to keep in mind the “significant connections” between Ford and Jaguar Land Rover in terms of component supply, engineering and manufacturing.

“The bid should be around $1.5 billion for the two brands together. Plus, it will have to take the overall accumulated losses and liabilities of the two companies, which I estimate to be between $1.5 billion and $2 billion,” said an auto analyst tracking Tata Motors.

Global sales of Jaguar and Land Rover stood around $22 billion in 2007. But they made a combined loss of $2.32 billion. Jaguar has 870 dealerships spread across 64 countries, while Land Rover has 1,376 dealerships spread across 138 countries.

The news of Tata Motors acquiring the brands generated a lot of interest after a TC channel jumped the gun to confirm the deal. When the business channel started flashing that Tata Motors has acquired the premier brands, a little premature in hindsight, the company spokesperson denied by stating, “We have no comments to offer on speculation.”

At Bombay House, the headquarters of the Tata group, Ratan Tata was preparing for a board meeting of the group’s power utility company, Tata Power, which was slated for 3.30pm. The news flash also took the top brass at Bombay House also by surprise.

The rumours were partly sparked by the second-largest car maker in US holding a board meeting in Detroit.

Even as Ford Motor results surprised investors, the news was swept to the background in London as news of new owners did the rounds for a few minutes. Ford Motor, after seven successive quarters, had finally made profits. The results, though, hardly had any ripples closer home.