Tata Jaguar Merging
Tata and Jaguar, Land Rover Deal
1. Motivation/ reason for the merger/ acquisition;
• Tata Motors wanted to have presence outside India
• It desired to have a diversified line-up ranging from the world's cheapest car to some of the more expensive
• It enabled Tata’s entry into luxury car segment
• JLR It had become a cash drag on Ford
• It would enable Ford to focus on its core Ford brand and "One Ford" global transformation.
• Take advantage of the low cost manufacturing base in India
2. Friendly/ hostile; Friendly
3. Value of the merger/ acquisition; Deal Value: $2.3 Billion
4. How the merger/ acquisition value compared to the market value of the target firm The two brands cost Ford $5.3 billion. Tata says the deal obligates Ford to pay about $600 million into the Jaguar-Land Rover pension fund on closing, so Ford will net only about $1.7 billion.
5. The impact of the merger/ acquisition on the price of the buyer firm This catapults Tata Motors into a high-profile position in the global auto industry. The shares of Tata Motors had initially taken a hit because the synergy had still to be exploited. But it bounced back after a little while and reported a good margin.
6. Any other Both the luxury brands had become a major cash drag on Ford particularly draining was Jaguar, into which Ford sank nearly $10 billion trying to revive the brand after spending $2.5 billion to buy it in a deal that closed in 1990. The sale to Tata was central to Ford’s strategy to turn the company around by refocusing the automaker on its core brands: Ford, Mercury and Lincoln. After Tata deal only Volvo remained from Ford's decade-long European buying spree. As part of the deal, Ford will continue to supply power trains, stampings and other unnamed vehicle components to Tata for "differing periods", as well as R&D research, environmental and platform technologies, and even accounting services, among others.
1. Motivation/ reason for the merger/ acquisition;
• Tata Motors wanted to have presence outside India
• It desired to have a diversified line-up ranging from the world's cheapest car to some of the more expensive
• It enabled Tata’s entry into luxury car segment
• JLR It had become a cash drag on Ford
• It would enable Ford to focus on its core Ford brand and "One Ford" global transformation.
• Take advantage of the low cost manufacturing base in India
2. Friendly/ hostile; Friendly
3. Value of the merger/ acquisition; Deal Value: $2.3 Billion
4. How the merger/ acquisition value compared to the market value of the target firm The two brands cost Ford $5.3 billion. Tata says the deal obligates Ford to pay about $600 million into the Jaguar-Land Rover pension fund on closing, so Ford will net only about $1.7 billion.
5. The impact of the merger/ acquisition on the price of the buyer firm This catapults Tata Motors into a high-profile position in the global auto industry. The shares of Tata Motors had initially taken a hit because the synergy had still to be exploited. But it bounced back after a little while and reported a good margin.
6. Any other Both the luxury brands had become a major cash drag on Ford particularly draining was Jaguar, into which Ford sank nearly $10 billion trying to revive the brand after spending $2.5 billion to buy it in a deal that closed in 1990. The sale to Tata was central to Ford’s strategy to turn the company around by refocusing the automaker on its core brands: Ford, Mercury and Lincoln. After Tata deal only Volvo remained from Ford's decade-long European buying spree. As part of the deal, Ford will continue to supply power trains, stampings and other unnamed vehicle components to Tata for "differing periods", as well as R&D research, environmental and platform technologies, and even accounting services, among others.