The battle for iconic British car brands, Jaguar and Land Rover, is set to be fought between two Indian firms. Ford Motor Co, the owner of the two brands, is believed to have narrowed the auction to three bids. Apart from the Tatas and Mahindra & Mahindra, One Equity Partners, a buyout firm funded by US investment bank JP Morgan, is on the final leg of the race.
Ford is struggling with declining sales and a falling US market share and announced last week it was nearing a deal to shed Jaguar and Land Rover. At the time it posted a third-quarter net loss of $380 million, compared with losses of $5.2 billion a year earlier.
Ford has been exploring the sale of the brands since June as it continues a global strategic review, which led in March to the sale of Aston Martin to a Kuwait-backed consortium.
Mahindra & Mahindra, India's top utility vehicle and tractor maker, initially pulled out of the process because it was only interested in Rover, whereas Ford wants to sell them together.
The company rejoined the auction after partnering with Apollo in a break-up bid that would give each one of the brands. Tata Motors, India's top vehicle maker, has a joint venture with Fiat to make cars.
When contacted, spokespersons of Tata Motors and M&M declined to comment.
Ford invited six second-round offers earlier this month, people familiar with the matter said at the time. It has now evaluated them and selected the three parties it wants to fight for the businesses, the sources said. One of the sources said the bidders are now expected to enter talks with trade unions and the UK government about conserving jobs amid speculation some of the bidders may try to move production outside the UK.
"We expect an agreement by early next year at the latest," a spokesman for Ford said. Ford declined to comment further.
Buyout firms TPG, Terra Firma and Ripplewood were among suitors that were expected to make second-round offers but were not on the third-round shortlist. Merrill Lynch analyst John Murphy at the time had valued the two brands at as much as $1.5 billion combined.