In the second half of 2007, Ford put on block two iconic British brands Jaguar and Land Rover for sale. Cash-strapped Ford, which lost about $12 billion in 2006, had been looking to sell the British luxury marques. Jaguar and Land Rover have been hit by unfavourable exchange rates and high production costs in Britain.
Two leading Indian conglomerates, Tata Motors and Mahindra & Mahindra (M&M) as well as U.S. private equity firm One Equity Partners led by former Ford CEO Jacques Nasser emerged as leading contenders.
As per industry sources M&M have pulled out the race citing complexities in the way the deal was structured. M&M decided against pursuing the deal as there were concerns related to Intellectual Property Rights (IPR) associated with the two brands. Crucial IPRs relating to the brands are locked in with the US auto major, making it difficult for the eventual winner to derive full benefits unhindered.
This development is expected to strengthen the case for Tata Motors. Tatas have emerged as the strongest contender in the race due to the group size as well as existing operations in the UK — especially after the acquisition of Corus — that helped tilt things in its favour. Unions at Jaguar and Land Rover are also backing Tata Motors' offer for the brands, according to published reports.
However the company faces potential trouble in the United States. The Jaguar’s US dealer association has expressed concerns that an Indian owner would devalue the luxury marque. Back home in India, Tata Motors is currently in the process of launching its ‘People’s Car’ with a price tag of about $3,000, which is about one-twentieth of the cost for least expensive Jaguar model.
Ford is on track to announce the sale early next year.
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