It’s official. Ford Motor Co, the world’s third-largest car-maker, on Thursday named the Tatas as its preferred bidder for luxury brands Jaguar and Land Rover.
"Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the
combined Jaguar-Land Rover business," said Ford Motor Company Executive Vice-President Lewis Booth. Jaguar and Land Rover have large markets in the US and west Europe.
"We are very positive about the prospects of this business going forward," said an emailed statement from the Tata Motors spokesperson.
However, the going will be tough for the Tatas.
Ford has agreed to give Tata Motors a few months of "exclusivity" in completing due diligence and sorting out issues including contribution to employee retirement funds, according to Tata group sources. The Ford statement did not mention the status of other bidders, which include Mahindra & Mahindra and US-based fund One Equity Partners.
"We are very positive about the prospects of this business going forward," said an emailed statement from the Tata Motors spokesperson.
However, the going will be tough for the Tatas. The Tatas have to settle nearly 40 agreements with dealers in various states and countries. Though the Tatas will gain from the technology transfer from the two brands, this will happen only over a period of time. "You cannot simply take the Jaguar’s technology for any other car brands. Tatas may need to spend a lot of time to settle the technology transfer issues," said an investment banker.
The unions representing Land Rover and Jaguar are backing the Tatas for now but have said that there are several labour-related issues to be cleared.
The two marques are struggling with high fuel costs and stringent emission norms proposed by the European Union. The Tatas, which will invest around $2 billion (Rs 8,000 crore) for getting the brands, will have to pump in more money to make them profitable.