Tata’s acquisition of Ford’s luxury brands
Ford Motor Company announced it will sell its Jaguar and Land Rover divisions to India’s Tata Group. The Tata Group already owns former British stalwarts Tetley Tea and steel company Corus Group PLC. Now, it's looking at a couple more renowned brands -- Jaguar and Land Rover -- a quantum leap in class for a group whose main vehicle business has been making inexpensive cars and trucks for Indians. The luxury brands would give Tata access to the know-how and the networks it would need to expand its presence abroad as well as to upgrade the vehicles it offers in its booming home market.
The acquisition, which could cost more than $1 billion, also would fit the Tata Group's plans to become one of India's first global brands and diversify its businesses overseas. "It is a part of their larger agenda of going global to acquire more technology" and new markets, says Jigar Shah, director at K.R. Choksey Shares & Securities in Mumbai. "In each of the group's businesses they have tried to delink themselves from India because India has its own [political and economic] risks." It is unlikely that Tata Motors will be able to sell many Jaguars or Land Rovers in India, but Mr. Shah says it could use the companies' technology and production facilities to improve its own cars and trucks. Tata Motors also would seek to use Jaguar's and Land Rover's international distribution networks to promote its own cars abroad, he says.
The steel-to-software Tata Group is one of India's largest and most respected conglomerates. Its 96 companies employ about 200,000 people and have annual sales of more than $20 billion. The group has been leading a wave of Indian overseas investment as local companies have used the wealth generated in India's strong domestic economy to make acquisitions around the world. In February, Tata Group's steel arm, Tata Steel Ltd., won a bidding war to buy Britain's Corus Group for about $13 billion. The group bought...
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