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A $ 2.3 Billion Takeover JUNE 2008
Presented By ± SULABH SINGH
MBA Int¶l Buss. A7002009007
´ Hiring of African Americans. Michigan Founded: 1903 by Henry Ford Competitors: General Motors. Volvo. Jaguar and Land Rover 1913 .Ford Motors Company Location: Dearborn. Mazda. focus on safety. massmassproduced automobile with standard interchangeable parts. Toyota. Mercury. Virtual manufacturing. Brand names: Lincoln. Advantage through fuel efficiency .Assembly Line: ³low priced.
Jaguar: The ups and downs: 1922 1960 1975 1984 1990 Founded in Blackpool as Swallow Sidecar compy Jaguar name first appeared in 1935 Nationalized in due to financial difficulties Floated off as a separate co in the stock market Taken over by Ford A statement of ultra luxury. Holds Royal warrants. Rarely advertised. Ford s formula one entry since 1990s .
The case of Land Rover: Known for superior off-road performance. 1948: Land Rover is designed by the Rover Car co 1976: One millionth Land Rover leaves the production line 1994: Rover Group is taken over by BMW 2000: Sold to Ford for £1.5 billion in 1989. But the US auto major put the two marquees on the market in 2007 after posting losses of $12. Ford acquired Land Rover for $2. 103- . Safe but less reliable. Makeover in recent times.6 billion in 2006 .the heaviest in its 103-year history.75 billion in 2000. Used by offmilitary for projects and expeditions.8 billion Key issues: Ford acquired Jaguar for $2.
Ford agreed to sell their Jaguar Land Rover operations to Tata Motors.9b) 03/01/2008 ± Ford announces Tatas as the preferred bidders 26/03/2008 .Announcement from Ford that it plans to sell Land Rover and Jaguar.The Deal Process: 12/06/200712/06/2007. M&M.05b & $ 1. Ceribrus capital Management. 02/06/2008 ± The acquisition is complete . TPG Capital. August 2007 . Apollo Management India s Tata Motors and M&M arrive as top bidders ($ 2.Major bidders are identified Likely buyers: Tata Motors.
which in December 2006 expressed the view that the ³policy to support its companies and the improved financial profile of its entities also enhances the overall financial flexibility of Tata Motors. Telco. Previously Tata Engineering and Locomotive Company. International praise came from Standard & Poor¶s.´ . Making Waves Internationally NANO will mark the advent of India as a global centre for smallsmall-car production and represent a victory for those who advocate making cheap goods for potential customers at the 'bottom of the pyramid' in emerging markets. Tata Motors s break-even point for capacity utilization is one breakof the best in the industry worldwide Listed on the New York Stock Exchange in 2004.TATA MOTORS TATA GROUP is 150 year old.
was driven by the record sale of 2. Ford is combining both the brands since the products and manufacturing of vehicles for Land Rover and Jaguar is so intertwined. Bringing down production costs and turning around the company successfully will be the challenge.26 lakh vehicles. an 18% YoY growth in 2007. on the other hand.´ analysts said. .Why is Ford selling? Reports said losses at Jaguar stood at USD 715 million in 2006. It¶s a test that Ford failed. The strong boy Land Rover's profit. Jaguar has not been able to provide any profit for ford because of the high manufacturing costs provided in the United Kingdom.
.' he said in a statement. while holding true to our principle of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.Ä 'We have enormous respect for the two brands and will endeavor to preserve and build on their Heritage and competitiveness.What Ratan Tata says? We aim to support their growth. keeping their identities intact.
Benefits from component sourcing. Land rover provides a natural fit for TML s suv segment.Why acquire JLR? Long term strategic commitment to automotive sector. Opportunity to participate in two fast growing auto segments. . design services and low cost engineering. Jaguar offers a range of ³performance/luxury´ vehicles to broaden the brand portfolio. Increased business diversity across markets and products.
.Tata and the dream NEED FOR GROWTH In the past few years.2 billion in 2006-07. with revenues of $7. it is the leader in commercial vehicles and the second largest in passenger vehicles. the Tata group has led the growing appetite among Indian companies to acquire businesses overseas in Europe. Australia and Africa .some even several times larger in a bid to consolidate operations and emerge as the new age multinationals. Tata Motors is India's largest automobile company. the United States. With over 4 2006million Tata vehicles plying in India.
is also facing heat from top car maker Maruti Suzuki India Ltd. Hyundai Motor. Volvo and MAN AG have struck local alliances for a bigger presence. Foreign vehicle makers including Daimler. Nissan Motor.COMPETITIVE ADVANTAGE Tata Motors is vulnerable to greater competition at home. Renault and Volkswagen. engines and transmissions in India. Tata Motors. . which has a joint venture with Fiat for cars.
which will be raised through loan. JLR.The real challenge lies in running JLR. which is the largest cross-border crossauto acquisition by an Indian company. The bridge money will be replaced by a combination of long-term debt and equity at longan appropriate time. company. The acquisition cost of $2. time. subsidiaries. . The company will raise funds to finance its equity contribution by selling a portion of its stake in some of its subsidiaries. Citigroup and JPMorgan are the lead advisors to the deal.3 billion is financed by a bridge loan. a syndicate of banks. banks.
BNP. Paribas. The loan has been structured in the form of stepstep-up financing: for the first six months. sixmonth Libor is currently at 2. Motors.Besides the two US banks. . the financing: interest charge would be Libor (London InterInterBank Offered Rate) plus 70 basis points and for the next six months. Chartered. Mizuho and Standard Chartered. ING. TokyoUFJ. which is 100% owned by 100% Tata Motors. will own these two brands. the loan was under eight banks ² SBI. The sixrate. Bank of Tokyo-Mitsubishi. it would be 140 basis points over the benchmark rate.63%. 63% The bridge loan is being raised by a special purpose vehicle ² Tata Motors UK.
Tata has acquired the two companies for about half the price that Ford paid their original owners when the latter acquired them in 1989. 1989. Deals. Tata Motors itself has just become more global after CORUS & FORD Deals. .
crunch. It turnaround. will have to significantly step up its R&D budget as well as increase operating expenditure and capital expenditure to meet JLR¶s requirements. Tata Motors will have to commit significant managerial and financial resources to engineer a turnaround. requirements. .The key challenge for the new owner of Jaguar and Land Rover will be to grow and maintain sales of the two brands in a global downturn and credit crunch.
which was agreed in allMarch. parties. brands On 2 June 2008 the sale to Tata was completed by both parties. as well as two dormant Lanchester and Rover. Rover. Included in the deal were the rights to three other British brands.The all-cash deal. Jaguar's Daimler. two advanced design centers in the UK and a worldwide network of sales companies. includes all necessary intellectual property rights. . own Daimler. manufacturing plants. companies.
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