Tata Motors has taken a huge step towards securing the iconic UK car brands Jaguar and Land Rover, after their owner, Ford, said it was to hold detailed discussions with the Indian group over a deal that could be signed next month.
Lewis Booth, executive vice-president of Ford Europe, said yesterday that the group was "committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business". He added that there was still "a considerable amount of work to do," but hoped to secure an agreement with the Indian group in talks over the next few weeks.
The carefully worded statement did not shut the door to rivals. It is understood Ford still needs assurances about certain elements of Tata's proposals.
Those still in the running are believed to comprise JP Morgan's private equity arm, One Equity Partners, whose bid is being run by the former Ford chief Jacques Nasser, and a consortium of Apollo Management and the Indian car group Mahindra & Mahindra.
One source close to the deal said: "There was no mention of exclusivity in the statement. All the bidders will remain in talks, although Tata is clearly out in front."
Tata confirmed the more detailed negotiations, and added: "We hope both parties can reach an agreement in the forthcoming weeks, though these are complex discussions and there is still much work that needs to be done before that position is reached."
While the exact amount of the combined bids is unknown, Ford is expected to make heavy losses on the deal. It bought Jaguar in 1989 for 1.6bn and Land Rover the next year for a further 1.7bn. The price of a combined bid was estimated at $1.5bn (760m) late last year.
The US group hired Goldman Sachs, Morgan Stanley and HSBC to review the units and test the market last summer. There was much private equity interest at the time, including TPG Capital, Cerberus and Ripplewood Holdings, which hired the former chairman of Jaguar Sir Nick Scheele to head its bid.
Ford aimed to have agreed a deal by the beginning of this year, but the next announcement could be the signing of the deal early next month. Ford is not expected to make a further announcement at the Detroit Auto Show, the next industry gathering, in two weeks' time.
Last year Tata secured a 6.7bn deal for Corus, formerly British Steel. It also owns Tetley Tea. A quarter of Tata's annual $48bn revenue now comes from the UK, where it employs 30,000.
Separately, Ford announced yesterday that its full-year sales in the US were down 12 per cent on 2006. Jaguar sales were down 24 per cent, while Land Rover managed to lift sales by 3 per cent. The group said: "More than two-thirds of Ford's sales decline reflected discontinued products."Reuse content