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TATA, the Indian conglomerate, has moved into pole position in the $3 billion (£1.5 billion) race to buy Jaguar and Land Rover, two of Britain’s most prestigious car marques.
Sources close to the negotiations say that positive meetings last week between Ravi Kant, managing director of Tata Motors, and trade-union and government officials have given the Indian conglomerate an edge over its rivals.
It still faces stiff competition from One Equity, an American private-equity group, and Mahindra, the Indian car group that is bidding with Apollo, another American buyout firm.
It is understood that Ford, the American automotive giant that is selling the two marques, could choose a preferred bidder within the next three weeks. The company is selling Jaguar and Land Rover as a single unit.
One Equity’s bid is led by Jac Nasser, a former chief executive at Ford.
While Jaguar is loss-making industry sources say it will lose about $500m this year Land Rover is having a purple patch. Sources at the bidding teams say they expect the business to make more than $1 billion this year, a remarkable result given the weakness of the US dollar. America is one of Jaguar and Land Rover’s biggest markets.
The sources say that the likely $3 billion price tag will include a one-off payment into the companies’ pension funds. They are in deficit, and negotiations with trustees over the level of the payment are continuing.
Tata Motors is part of the sprawling Tata commercial empire presided over by Ratan Tata, chairman of Tata Sons.
Kant and other bidders met unions and government officials last week.
Sources close to the negotiations said there was still significant uncertainty over the outcome.
“Tata has been a hit with the unions and the government, but there may still be an issue over intellectual-property transfer and, of course, price,” one said.
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Pay back time, and what goes around? What!
India's had great indutries before WW2, just as the other Dominion, Canada. In fact certain industries shrunk our business, and we lost out India, a creditor nation after the war. It might make sense if it were some of our greedy Financial companies being bought, they use India for their own benefit still (in fact, if it made our cost of living cheaper, it would be good), but I do not ever remember Land Rover/Jaguar exploiting, and stealing jobs from India.
This is not the same. But I know jobs have been lost at Ryton's Talbot works, and Seimens make sure the steam turbines are probably only built in Germeny, while we only develop and design them. What have we ever done to Germany, and it sure is hell never happens to them. This has happened a lot to Britain, in which all the manufacturing capability is lost, and we just have the smaller design capbalility left for us.
Anyway, this is actualy good news about JLR, an American company.
Darren Riche-Webber, Southampton, Britain/England
If Tata runs JLR the same way they have run all their other aquisitions (Daewoo Commecial Vehicles, Corus, Tetley etc, then other than keeping an eye on it, they will let JLR run itself, and concentrate on the synergies. The synergies will be assembling completely knocked down kits (CDKs) of the Daewoo heavy truck from Korea, and CDKs of Tata and Tata/Fiat joint venture small cars in the UK plants for the EU market in JLR plants so these are used to full capacity. It is likely that there will be some platform and component sharing with Fiat's Alpha Romeo, Ferrari, and Maserati given Tata's existing wide ranging platform and component sharing deals with Fiat - certainly better than Ford's economy components. They will also export CDKs of Jaguar and Landrover vehicles to India for assembley for the local market to get around import tarrifs (market for luxury vehicles in India is too small for production there). Another synergy is dealerships in the US, which neither Tata or Fiat have.
SM, Cambridge, UK
to Martin jones.
Ofcourse a british company can buy an indian company anytime. Vodafone last year bought Hutch(Telecom provider in India) for a beefy sum.
Its all about the money now-a-days. recently, with the rise of Indian and chinese economy, new markets are opened in those countries and companies that rely heavily only on the european and the US markets are losing the race. as such, one by one, these companies will all go on sale to these emerging co-orporations from India/china.
JoeV, chicago, US
Would a British company be allowed to buy an Indian car company?
Martin Jones, Grays, Essex
we need someone who will invest in AWD, an SUV, and a $50k convertible...let Ian go...take a long term investment outlook and the company will be worth 50 million pounds with 10 years....the start around could start within 18 months,,,come on guys it's all about product...
dennis A Squitieri, Paramus, USA/ New Jersey
Keep up the Good Work and come out in flying colors making JLR , a profitable business.
Kumar, Coventry, UK
I will not buy a Jaguar built in India!!!
Q. Baig, Leeds (UK),
Who will buy a LR built in India ? TATA cant get the quality right on the Safari so I dread to think what they will do to the LR. Have you guys seen the panel gaps on the Safari ?
S. Gill, Chandigarh,
For industries to succeed in an competitive environment, they need to have foot in developing market along with a stronghold in research and sales network. We can see this by many of deals that have happened over the lat few years with companies looking towards east for growth which they cannot find in the crowded developed markets.
Even so, as these developing markets also develop and reach with a currency valuation and costs that are near to that of the 1 first line developed countries, there will still be new frontiers.
Chinese traders in Uganda have increased multifold and expected reach the number of the Indian traders already rooted there. World will be soon be back to its old equilibrium of trade shattered by colonialism of last few centuries.
Amol, Banagalore, India/Bangalore
We are all evil for driving a Land Rover, but at least it is a British success story!!
At least the Indians might be proud of it. Once it is moved over there The British will moan about the loss of jobs etc !
Some people relish freedom of choice.
andy, petersfield,
It's pay back time guys
krish, Toronto, Canada
OK, so it's started.
By that I mean the targeting of our successful industries by investors from what were a few years ago considered 'emerging economies'. They are full of cash reserves and appear to have the ability to borrow on a far greater scale than here now that the credit cruch has arrived.
With banks in the US and the UK being stuffed with worthless sub prime loan instruments and declining confidence the ability for domestic white knights to raise an offer are nil.
The next purchases will undoubtedly be in the USA and the purchases will probably be in the form of a return of their own devalued and sinking dollar.
Diddly Do, liverpool,
What goes arond coes around, 200 yr ago the Brits stole the jobs and industries of india and now its give back time.
Vikram Aarella, Cardiff, Wales
the empire strike back----very bad sign---what is next buckingham palace?
saud, riyadh,
Good Luck Ratan Tata.
Rahim Khan, Sabah, Malaysia