By Vipin Agnihotri
Good news for India, renowned car makers Ford is all to set to announce the Tata Group as the preferred bidder for its iconic Jaguar and Land Rover. Sources have confirmed to The India Street that the deal will be finalized in a matter of 15 days.
In my opinion, Ford’s picking Tata would be a historic moment because of the simple reason that it would be the first time a major Western car group is going to be bought by an Indian company.
According to experts, the deal is said to be for about £1 billion but the exact amount could change once Tata is declared the preferred bidder. It is worth mentioning in this regard that Tatas may have to negotiate a settlement with the pension trustees and also have to make sure that Ford continues to maintain regular supply of components and engines.
Point to be noted here is that Ford has lost $12.6 billion in 2006 and because of this they were looking to sell Jaguar and Land Rover which have been hit by unfavorable exchange rates and high production costs in Britain.
But everything is not rosy for Tata Group, as they have to deal with the cost of complying with stricter emissions regulations in Europe. In addition, it is still unclear whether the successful bidder would be permitted to use intellectual property belonging to Jaguar and Land Rover in other parts of the group.
Once Tata Group wins the bid, they have to sign an engine supply pact for 5 years with Ford of Europe and Ford is not likely to retain any stake in either Jaguar or Land Rover though the workers' union wanted Ford to retain a minority stake. Not so long ago, Ford completed the sale of its controlling stake in Aston Martin for $931 million in cash and preferred stock. Indications are that Ford is interested in keeping Volvo for now, fixing its cost structure and making it a more premium brand.
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