Tata may bid for Jaguar, Land Rover

Sources said Tata Motors had appointed advisors to evaluate a bid.

In keeping with its growing appetite for overseas acquisitions, the Tata group is evaluating a bid to buy luxury British car brands Jaguar and Land Rover from struggling US car maker Ford.

Sources close to the development said the group's automobile firm, Tata Motors, had appointed advisors to evaluate a bid and also signed a confidentiality agreement with Ford for access to the financials of the iconic marques.

A successful bid for Jaguar and Land Rover, which have been underperforming ever since Ford acquired them seven years ago, may cost over Rs 6,000 crore.

Sources said the exercise was at an exploratory stage and might not lead to a bid. The two firms have a combined UK workforce of 19,000.

When contacted, a Tata Motors spokesperson said the company did not comment on speculation on mergers and acquisitions.

Land Rover is a luxury brand and was bought by Ford Motor from BMW in 2000. It set a new global sales record in the first half of this year, helped by strong sales abroad.

Also headquartered in the UK, Jaguar produces a series of elegantly-styled sports cars and luxury saloons. The company, which once boasted of a 20 per cent market share in the UK luxury car market, has recently seen its sales slump and dues mount.

The Tata move comes exactly four years after it set up a joint venture with Rover to market the Indica in Europe under the brand name CityRover.

The tie-up with Rover was then seen to be a crucial part of Tata Motors' overseas push and also for making headway into one of the largest automotive markets in the world.

The joint venture, however, fell apart as orders dried up and Rover wanted to re-negotiate the price, citing quality problems.

European car manufacturers Renault and Fiat recently ruled out the possibility of bidding for Jaguar and Land Rover. Investment banks Goldman Sachs, Morgan Stanley and HSBC recently refused to comment on reports that they are advising on the sale. Ford suffered losses of £6.3 billion last year.

Sources also said Mahindra & Mahindra (M&M) and some other private equity players might also show interest in these brands. An M&M executive declined to comment on whether it was interested in bidding.

However, he indicated that the company might not be very keen, as Jaguar and Land Rover might not fit into M&M's overall plan.

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DRIVING GROWTH THROUGH M&As
(Major alliances of Tata Motors in the recent past)

In 2004, Tata Motors acquired the ailing Daewoo Commercial Vehicles for about Rs 465 crore and later renamed it Tata Daewoo Commercial Vehicle

In 2005, Tata Motors picked up 21 per cent in Hispano Carrocera SA, a well-known Spanish bus company

Tata Motors forged a joint venture with Brazilian bus maker Marco Polo for a facility for buses and coaches in India

Tata Africa, a subsidiary of Tata International, bought the manufacturing facility of Nissan to manufacture the Indigo and Indica and other models to cater to South Africa