Tata Jlr Acqusition
Case Study | Strategic Management | 10th August 2010 |
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Introduction
In June 2008, India-based Tata Motors Ltd. announced that it had completed the acquisition of the two iconic British brands - Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion. Forming a part of the purchase consideration were JLR's manufacturing plants, two advanced design centers in the UK, national sales companies spanning across the world, and also licenses of all necessary intellectual property rights.
There was widespread skepticism in market over an Indian company owning the luxury brands. 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. Market conditions were extremely tough, especially in the key US market. Tatas needed to invest a lot in brand building to make JLR profitable. Onset of recession not only made investment look mistimed, but also started wiping out the JLR market.
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TATA - JLR deal
Tata had completed this biggest buy-out in the automobile space by an Indian company on June 2, 2008 as it bought the ownership of luxury brands - Jaguar and Land Rover. The deal included the purchase of JLR's manufacturing plants, two advanced design centers in the UK, national sales companies spanning across the world and also licenses of all necessary intellectual property rights.
Tata Motors was interested in acquiring JLR as it will reduce the company’s dependence on the Indian market, which accounted for 90% of its sales. Morgan Stanley reported that JLR’s acquisition appeared negative for Tata Motors, as it had increased the earnings volatility, given the difficult economic conditions in the key markets of JLR including the US and Europe.
Tata Motors raised $3 billion (about Rs 12,000 crore) through bridge
-------------------------------------------------
Introduction
In June 2008, India-based Tata Motors Ltd. announced that it had completed the acquisition of the two iconic British brands - Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion. Forming a part of the purchase consideration were JLR's manufacturing plants, two advanced design centers in the UK, national sales companies spanning across the world, and also licenses of all necessary intellectual property rights.
There was widespread skepticism in market over an Indian company owning the luxury brands. 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. Market conditions were extremely tough, especially in the key US market. Tatas needed to invest a lot in brand building to make JLR profitable. Onset of recession not only made investment look mistimed, but also started wiping out the JLR market.
-------------------------------------------------
TATA - JLR deal
Tata had completed this biggest buy-out in the automobile space by an Indian company on June 2, 2008 as it bought the ownership of luxury brands - Jaguar and Land Rover. The deal included the purchase of JLR's manufacturing plants, two advanced design centers in the UK, national sales companies spanning across the world and also licenses of all necessary intellectual property rights.
Tata Motors was interested in acquiring JLR as it will reduce the company’s dependence on the Indian market, which accounted for 90% of its sales. Morgan Stanley reported that JLR’s acquisition appeared negative for Tata Motors, as it had increased the earnings volatility, given the difficult economic conditions in the key markets of JLR including the US and Europe.
Tata Motors raised $3 billion (about Rs 12,000 crore) through bridge