17-01-2012, 03:54 PM
Case study of Tata Motor Acquisition of Jaguar and Land Rover
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According to industry analysts, some of the issues that could trouble Tata Motors were economic slowdown in European and American markets, funding risks, currency risks etc.
Acquisition of Jaguar and Land Rover provides the company with a strategic opportunity to acquire iconic brands with a great heritage and global presence, and increase the company’s business diversity across markets and product segments.- Tata Motors, in April 2008.
“If they run the brands as a British company and invest properly in new product, it will be successful because they are still attractive brands.”- Charles Hughes, Founder, Brand Rules LLC, in 2008.
“Market conditions are now extremely tough, especially in the key US market, and the Tatas will need to invest in a lot of brand building to make and keep JLR profitable.”- Ian Gomes, Global Head, Emerging Markets, KPMG, in 2008.
Acquisition of British Icons
On June 02, 2008, India-based Tata Motors completed the acquisition of the Jaguar and Land Rover (JLR) units from the US-based auto manufacturer Ford Motor Company (Ford) for US$ 2.3 billion, on a cash free-debt free basis. JLR was a part of Ford’s Premier Automotive Group (PAG) and were considered to be British icons. Jaguar was involved in the manufacture of high-end luxury cars, while Land Rover manufactured high-end SUVs.
The Deal
On March 26, 2008, Tata Motors entered into an agreement with Ford for the purchase of Jaguar and Land Rover. Tata Motors agreed to pay US$ 2.3 billion in cash for a 100% acquisition of the businesses of JLR. As part of the acquisition, Tata Motors did not inherit any of the debt liabilities of JLR – the acquisition was totally debt free.
The Benefits
Tata Motors was interested in acquiring JLR as it would reduce the company’s dependence on the Indian market, which accounted for 90% of its sales. The company was of the view that the acquisition would provide it with the opportunity to spread its business across different geographies and across different customer segments
The Road Ahead
Tata Motors had formed an integration committee with senior executives from the JLR and Tata Motors, to set milestones and long-term goals for the acquired entities. One of the major problems for Tata Motors could be the slowing down of the European and US automobile markets. It was expected that the company would address this issue by concentrating on countries like Russia, China, India, and the Middle East.
[attachment=16186]
According to industry analysts, some of the issues that could trouble Tata Motors were economic slowdown in European and American markets, funding risks, currency risks etc.
Acquisition of Jaguar and Land Rover provides the company with a strategic opportunity to acquire iconic brands with a great heritage and global presence, and increase the company’s business diversity across markets and product segments.- Tata Motors, in April 2008.
“If they run the brands as a British company and invest properly in new product, it will be successful because they are still attractive brands.”- Charles Hughes, Founder, Brand Rules LLC, in 2008.
“Market conditions are now extremely tough, especially in the key US market, and the Tatas will need to invest in a lot of brand building to make and keep JLR profitable.”- Ian Gomes, Global Head, Emerging Markets, KPMG, in 2008.
Acquisition of British Icons
On June 02, 2008, India-based Tata Motors completed the acquisition of the Jaguar and Land Rover (JLR) units from the US-based auto manufacturer Ford Motor Company (Ford) for US$ 2.3 billion, on a cash free-debt free basis. JLR was a part of Ford’s Premier Automotive Group (PAG) and were considered to be British icons. Jaguar was involved in the manufacture of high-end luxury cars, while Land Rover manufactured high-end SUVs.
The Deal
On March 26, 2008, Tata Motors entered into an agreement with Ford for the purchase of Jaguar and Land Rover. Tata Motors agreed to pay US$ 2.3 billion in cash for a 100% acquisition of the businesses of JLR. As part of the acquisition, Tata Motors did not inherit any of the debt liabilities of JLR – the acquisition was totally debt free.
The Benefits
Tata Motors was interested in acquiring JLR as it would reduce the company’s dependence on the Indian market, which accounted for 90% of its sales. The company was of the view that the acquisition would provide it with the opportunity to spread its business across different geographies and across different customer segments
The Road Ahead
Tata Motors had formed an integration committee with senior executives from the JLR and Tata Motors, to set milestones and long-term goals for the acquired entities. One of the major problems for Tata Motors could be the slowing down of the European and US automobile markets. It was expected that the company would address this issue by concentrating on countries like Russia, China, India, and the Middle East.