Indian firms eye Jaguar, Land Rover

[Maddy]

Indian firms eye Jaguar, Land Rover: Report

Jul 26, 2007 08:54 AM
Rina Chandran
Reuters News Agency

MUMBAI – India's Tata Motors Ltd., famous for developing a cheaper car for the masses, may be making a drive for the luxury end of the market with a possible offer for Ford Motor Co.'s Jaguar and Land Rover.

Tata Motors, India's top vehicle maker, and local foe Mahindra & Mahindra Ltd. are expected to launch rival bids for the two famous brands, which are expected to fetch roughly $1.5 billion (U.S.), several media reports have said.

Both declined comment on reports that they are in talks with investment banks and private equity firms to craft bids. A successful deal would catapult the winner into the ranks of global car makers and continue a spate of high-profile overseas acquisitions by Indian companies.

Ford, which posted a surprise quarterly profit on Thursday, said last week it had contact with possible buyers and was evaluating the level of interest in the brands.

India's CNBC-18 TV network said on Thursday that Tata was the front-runner in bidding for the two brands, but did not identify its source.

Mahindra has the advantage of familiarity. India's top utility vehicle and tractor maker was Ford's partner on its entry into India in 1996.

But analysts said the might of the Tata Group, which is India's second-biggest privately owned group, gives it an edge.

"They are in a better position, given their size and the backing of the group," said Ramnath S, an auto analyst at SSKI Securities.

"It makes better strategic sense for Tata, and (chairman) Ratan Tata has an obvious passion for these marquee brands."

Tata Motors is clearly keen on the U.K. market: it had previously partnered MG Rover to distribute its hatchback there.

Other bidders may include Cerberus Capital Management, the investment group that purchased the Chrysler Group in May from DaimlerChrysler, as well as Ripplewood Holdings and One Equity Partners, media reports have said.

The Tata Group is not afraid to make big-ticket buys. In January, Tata Steel paid $12 billion for Anglo-Dutch steel maker Corus.

Tata Tea last year paid $677 million for a stake in U.S. beverage firm Energy Brands, which it then sold to Coca-Cola. It had also bought U.K.'s Tetley Tea for $432 million.

If Tata joined forces with private equity firms, it would be a first for a group accustomed to making solo bids.

Outbound India M&A deals this year total $15.26 billion from 108 deals, according to data from Dealogic. That compares with $5.95 billion from 89 deals in the same period last year and $21.7 billion from 167 deals in the whole of 2006.

Both Tata Motors and Mahindra have global ambitions, with a focus on exports.

Tata Motors has a joint venture with Italy's Fiat to manufacture vehicles and engines in India, besides distribution in overseas markets.

Mahindra has a venture with Renault to make the Logan sedan in India, and a separate alliance with Renault and Nissan Motor to make up to 400,000 vehicles in India.

Tata Motors, the No. 3 car maker in India, is scheduled to launch a small car priced at under $2,500 next year, which has prompted others, including Renault, Toyota Motor and Fiat to also consider a cheap car for emerging markets.

So a big acquisition would stretch Tata and Mahindra at a time when they are adding capacity and developing new products, analysts say.

"It will open the door to new markets, new distribution networks and new technologies, but at what cost?" Ramnath said.

"It would be expensive, really stretch their balance sheets."

Another analyst, who asked not to be identified, said Tata and Mahindra, known for making sturdy if unexciting vehicles suited to India's bad roads, may have a hard time generating cost-savings and innovation from such a tie-up.

"Western firms are taking Indian and Chinese firms seriously, and it's definitely an opportunity for them to go global and go up the value chain and product hierarchy quickly," he said.

"But I have my doubts about how quickly they can get any direct synergies," he said.

 

[Bull]

Other than the bran value there is nothing into this deal. Whoever gets it can glee over it infront of the media for some days but the after that it would be a woefull life dealing with stagnating sales and increasing competition and losing money.

But they know more than me for sure.

But i dont know if TATA/Mahindra can do anything better than Ford could, whcih has decades of experience.

 

[Bushroda]

Bull, the deal isn't just about acquiring an international brand but projecting Tata Motors as an international Brand. This deal could do the same to Tata Motors what Corus did to Tata Steel.

 

[Cheetah786]

Bull, the deal isn't just about acquiring an international brand but projecting Tata Motors as an international Brand. This deal could do the same to Tata Motors what Corus did to Tata Steel.

you mean what it did to ford and now they have to sell it after losing Millions for years.

 

[Bull]

Bull, the deal isn't just about acquiring an international brand but projecting Tata Motors as an international Brand. This deal could do the same to Tata Motors what Corus did to Tata Steel.

Tata Steel and Corus is totally different case. Tata bought a good company which was recently restuctured in an Industry where the producers are highly fragmented. This provided them with better pricing power.

But TATA motors buying Jaguar is just a showcase event, i dont see anything financial in it. None of the TATA cars/UVs have the quality to go anywhere in developed Asia (SE and NE) forget Europe. TATA would end relying on Jaguar and Range rover brands to make them money, which is a distant dream as ford with its years of experience failed to.

On the other hand Mahindra looks better off buying Range rover and leaving Jagura alone. Mahindra jeeps are used enthusiastically in parts of Europe and is known as a cheap reliable efficient Jeep copy. And moreover Mahindra wants to do somethign serious in the UV segment. There first effort Scorpi was good atleast as per Indian standards, had good finish and paint work.

 

[Bull]

you mean what it did to ford and now they have to sell it after losing Millions for years.

Ford's main business is itself suffering and thats why they are selling it off.

 

[Bushroda]

Tata Steel and Corus is totally different case. Tata bought a good company which was recently restuctured in an Industry where the producers are highly fragmented. This provided them with better pricing power.

The most important reason why Tata bought over Corus was to project itself in European & Latin American market especially Latin America where demand for steel is set to rise. They needed a high profile name to bank over & Corus provided them.

But TATA motors buying Jaguar is just a showcase event, i dont see anything financial in it. None of the TATA cars/UVs have the quality to go anywhere in developed Asia (SE and NE) forget Europe. TATA would end relying on Jaguar and Range rover brands to make them money, which is a distant dream as ford with its years of experience failed to.

This is not true. Tata has been marketing its Tata Indica in Europe under the brand name of MG Rower designated as City Rower. Similarly, Indian leather bag design company HiDesign is marketed in Europe under Radley's brand name. The quality of goods produced isn't any way inferior to the European counterparts only that a big brand name is missing. This is where Jaguar & Land Rower come in. Buying these big names helps fill up the gap needed to market a brand name. Quality is directly associated with cost. If anybody is willing to pay $15k for a car then Tata motors can give the value for his money.

 

[Cheetah786]

Ford's main business is itself suffering and thats why they are selling it off.

bull fords main business is manufacturing cars.

reason they are selling it is simple these 2 brands have never turned a profit for years.actually i cant remember the last time they did.these brands are gas guzzling vehicles and i doubt in the near future there fortunes are about to turn.ford will play an accounting tricks and turn profits just before they sell.

BMW failed to turn it around and sold it to ford in 2000.and now ford is selling it.

 

[Cheetah786]

The most important reason why Tata bought over Corus was to project itself in European & Latin American market especially Latin America where demand for steel is set to rise. They needed a high profile name to bank over & Corus provided them.



This is not true. Tata has been marketing its Tata Indica in Europe under the brand name of MG Rower designated as City Rower. Similarly, Indian leather bag design company HiDesign is marketed in Europe under Radley's brand name. The quality of goods produced isn't any way inferior to the European counterparts only that a big brand name is missing. This is where Jaguar & Land Rower come in. Buying these big names helps fill up the gap needed to market a brand name. Quality is directly associated with cost. If anybody is willing to pay $15k for a car then Tata motors can give the value for his money.

let me give u a simple example a cup of coffee at a chain store in usa cost bout $1.00 same thing at second cup costs $3.00 And guess what it cost at starbucks about 7 to 10 dollars.
conclusion name sells not the product.

 

[genmirajborgza786]

i think a project more like an advanced KIA/Hyundai/ford/dodge will be a much better option i mean jaguar is an expensive vehicle and at the present moment just don't fit in the main stream Asian (except for gulf states and japan) budgetary of local mass productions/sales.

 

[Bushroda]

let me give u a simple example a cup of coffee at a chain store in usa cost bout $1.00 same thing at second cup costs $3.00 And guess what it cost at starbucks about 7 to 10 dollars.
conclusion name sells not the product.

Thats the same point I've iterated in my last post.

But how do you make a brand?
Either launch a new brand by excessive spending, hiring best marketing firms in business & hoping to pull through or you let the media make a buzz. Acquiring Jaguar/Land Rower would give the same media publicity that Tata Motors is looking for. Jaguar/Land Rower are well established product line in automobile industry. By buying them Tata would instantly make a name for themselves & then it would give them a chance to showcase their already existing line of products in India. And all this talk of Tata making inferior quality automobiles is pure bullcr@p.

 

[Maddy]

Ford shortlists Jaguar buyers

The Tatas may start the due-diligence to takeover Jaguar and Land Rovers-- which are being put on the block by US auto major Ford---next week.

Senior executives from Tata Motors and the investment banking team are currently in London to kick start the due-dligence.

"Senior Tata officials are already in London. They will start due diligence from next week," said a source close to the transaction.

Sources close to Bombay House, the business headquarters of Tatas, said that the team would examine the balance sheets of Ford and discuss synergies of acquiring Jaguar and Land Rovers brands.

Arun Gandhi, the Tata Sons’ director and the man who clinched the Corus deal, is expected to lead the team of negotiators. Arun Gandhi is also believed to be in London now. Gandhi, who is understood to be busy with Corus integration, may get busy with the Ford transaction sooner than later. A Tata group spokesperson declined to comment on the issue.

According to investment banking sources, the advisors of Ford, Goldman Sachs, HSBC and Merrill Lynch are in talks with the prospective bidders and would ask for binding offers by the end of this month. Ford said on July 19 that it had received two offers but did not specify the bidders. Ford and Lehman Brothers have separately valued the both Land Rovers and Jaguar together at $3-7 billion.

Tata Motors and Mahindra & Mahindra are in the race to acquire Jaguar and Land Rovers. Tatas are understood to have appointed Citi group as advisors for the deal, while private equity funds including TPG, Carlyele and Cerebrus Capital are eager to join hands with Tatas for the buyout.

International media quoting Ford chief executive Alan Mulally that 'Ford is open to different options including retaining a minority stake in the company'.

Ford bought Land Rover from BMW in 2000 for 1.8 billion pounds. It acquired Jaguar from British government in 1989.

This would be Tatas second biggest acquisition in the UK. Earlier this year, it acquired Anglo-Dutch steel maker Corus for $12.3 billion. Mahindras are also keen on global buyouts.

http://www.hindustantimes.com/Story...D=4501&Headline=Ford+shortlists+Jaguar+buyers

 

[Bull]

And all this talk of Tata making inferior quality automobiles is pure bullcr@p.

Oh pls they make crappy products. Its onyl their Daewoo acquisiton that has helped them add quality novus range of trucks to their line up. Other than that there is nothing which can go to europe.

 

[Bull]

This is not true. Tata has been marketing its Tata Indica in Europe under the brand name of MG Rower designated as City Rower..

Dont speak abt CityRover to a British, he will bash you. Indica aka Cityrover is nothing more than a motorised cart.

If anybody is willing to pay $15k for a car then Tata motors can give the value for his money.

Thats even more out of reality.

 

[Bushroda]

Oh pls they make crappy products. Its onyl their Daewoo acquisiton that has helped them add quality novus range of trucks to their line up. Other than that there is nothing which can go to europe.

If it was your car that stopped in the middle of the road and you had to push it all the way to the nearest garage then I can understand your grudge. Otherwise there is no way that you prove that Tata makes any inferior quality automobiles. Moreover, we ain't living in 1950s anymore when cars were supposed to last for a complete generation. Today, you buy something and it becomes obsolete in next three years. Also with automobiles component becoming cheap you cannot hope for a HQ product except if you buy from Rolls Royce.