Indian bid favourite to win race for Jaguar and Land Rover

Dec 17 2007 Liverpool Daily Post

Jaguar cars at Halewood

THE Indian conglomerate which wants to take over Ford’s Jaguar and Land Rover car marques is to be given preferred bidder status.

Car giant Ford is expected to announce that Tata is the favoured suitor for the parts of the company it is selling off – including the Halewood plant, which employs more than 2,000 – within the next two weeks, according to press reports.

The group said last month that it hoped to conclude the sale of its luxury brands Jaguar and Land Rover by early next year.

Tata has won support from unions because it is understood to want to keep work in the UK, including Halewood, which is expected to produce the new ‘baby’ Land Rover, unveiled in the Daily Post on Saturday.

Speculation has been growing in recent weeks that Tata has moved into pole position in the six-month tussle to take over the marques.

It is understood that Ford whittled the bidders down to three last week, with Tata up against fellow Indian car firm Mahindra and US private equity firm One Equity.

However, Ford said last night it had “nothing else to add on the sale process” except to confirm its plans to conclude the sale by early 2008.

Tata is thought to be offering around £1bn for the two car brands – among Britain’s most famous marques.

If Tata is named preferred bidder, it will enter detailed negotiations with Ford, when a final price will be agreed.

It would mark the first takeover of a major Western car group by an Indian firm.

Yesterday’s report follows just weeks after car workers union Unite said Tata Group was its preferred choice, given its solid manufacturing background.

But the pension deficits at the two car brands is thought to be an issue, with the Financial Times recently saying that Ford may even have to pay any buyer to take the brands.

With Ford likely to retain a significant minority stake, the value to the US company of any sale could be more than swallowed up by an estimated £1bn pension deficit.

Ford put the two car brands up for sale earlier this year as part of measures to shore up flagging profits, after it posted the biggest loss in its 103-year history.

However, the group last month reported a narrower quarterly loss of $380m (£188m), compared with $5.2bn a year earlier.

The turnaround included a small profit at the combined Jaguar and Land Rover operation, with the improvement aided by cost reductions and the non-recurrence of one-off items from the previous year.

Ford’s Premier Automotive Group, which includes Volvo as well as Jaguar and Land Rover, reported a pre-tax loss of $97m (£48m), compared with $508m losses seen in 2006.

Ford bought Jaguar in 1989 for £1.6bn and paid £1.7bn for Land Rover in 2000.

It sold another PAG brand, Aston Martin, for £450m, in March, and is also conducting a strategic review of Volvo in order to improve the marque’s financial performance.