Ford Announces Jaguar, Land Rover Sale Agreement

Not strictly tyre-related, but nevertheless a significant event for the UK automotive industry. On March 26 the Ford Motor Company announced its entry into a definitive agreement to sell its Jaguar Land Rover operations to India’s Tata Motors. The transaction, says Ford, is the culmination of its August 2007 decision to explore “strategic options” for the Jaguar Land Rover business while accelerating its focus on its core Ford brand and One Ford global transformation.

The total cash amount to be paid by Tata Motors for Jaguar Land Rover upon closing will be approximately US$2.3 billion. At closing, Ford will then contribute up to approximately $600 million to the Jaguar Land Rover pension plans. The sale is expected to close by the end of the next quarter and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

“Jaguar and Land Rover are terrific brands,” said Alan Mulally, Ford Motor Company president and CEO. “We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata’s stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all.”

“This is a good agreement,” added Lewis Booth, executive vice president, Ford Motor Company, who has responsibility for Ford of Europe, Volvo and Jaguar Land Rover. “It provides the Jaguar Land Rover management team and employees with the assurances needed to maintain their focus on delivering the best results for the business. I am confident that, under its new owner, Jaguar Land Rover will continue to build upon the significant improvements and product successes it has achieved in recent years.”

As part of the transaction, Ford reports will continue to supply Jaguar Land Rover for “differing periods” with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services. In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which may vary by market, of up to 12 months.

According to Ford, the parties involved believe these arrangements will support Jaguar Land Rovers current product plans, while providing Jaguar Land Rover the freedom to develop its own stand-alone capabilities in the future that will best serve its premium manufacturer requirements. The parties do not anticipate that completion of the transaction will bring about any significant changes to the terms of employment of Jaguar Land Rover employees.

Speaking about today’s agreement, Mr Ratan N. Tata, chairman of Tata Sons and Tata Motors, commented: “We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.”

Jaguar Land Rovers employees, trade unions and the UK Government have been kept informed of developments as the sale process progressed, reports Ford, and have indicated their support for the agreement. Speaking on behalf of Jaguar Land Rover, Geoff Polites, chief executive officer, said: “Jaguar Land Rovers management team is very pleased that Ford and Tata Motors have come to an agreement today. Our team has been consulted extensively on the deal content and feels confident that it provides for the business needs of both our brands going forward.

“We have also had the opportunity to meet senior executives from Tata Motors and the Tata group,” Polites continued. “They have expressed confidence in the team that has delivered significant improvements in Jaguar Land Rovers business performance. We feel confident that we can forge a strong working relationship with our new parent company, and we look forward to a bright and successful future for Jaguar Land Rover.”