India’s Tata Motors Ltd. says it will acquire British automakers Jaguar and Land Rover from Ford Motor Co. for $2.3 billion.
The Tata Group is an Indian conglomerate with 98 companies spanning a variety of industries.
The sale is essentially the death knell for Ford’s Premier Automotive Group, which former CEO Jacques Nasser created in 1999 as the company’s luxury vehicle division.
The dissolution of Ford’s so-called PAG unit started in March 2007, when Ford, trying to raise cash for its bleeding North American operations, sold the ultra-luxury Aston Martin brand for $848 million.
After the sale of Jaguar and Land Rover, which are based in Britain and have conjoined management, engineering, manufacturing and distribution operations, PAG will have just one foreign luxury brand in its portfolio: Volvo.
Ford, and many experts who follow the industry, have expressed a desire to see the Swedish Volvo brand more tightly incorporated into Ford’s worldwide operations, where it can share a lot of its engineering expertise, specifically in the area of safety, with Ford. The new Taurus, for example, was engineered with assistance from Volvo.
While some analysts have speculated that Jaguar and Land Rover could fetch as much as $8 billion, other experts previously told the Free Press that amount would be surprising. Prior to the sale, Merrill Lynch & Co. estimated the sale of the brands would put an extra $1.3 billion to $1.5 billion in Ford’s pocket.
That’s far less than what Ford paid for the brands. Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000.
In November, Ford said it was creating a new plan to improve the financial performance at Volvo, which includes enhancing the brand’s position as a global producer of premium vehicles; establishing appropriate business arrangements between Volvo and Ford-brand operations to allow Volvo to operate on a more stand-alone basis in the absence of the PAG structure.
Ford also plans to disclose Volvo’s financial performance beginning with 2008 results.
