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 . 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. SWOT..
