The deal comprises brands, plants and Intellectual Property Rights, and the transfer of ownership to Tata Motors is expected to close by the end of the next quarter, subject to applicable regulatory approvals, said a statement. At closing, Ford will then contribute up to about 600 million dollars to the Jaguar Land Rover pension plans. Commenting on the agreement Tata Sons and Tata Motors Chairman Ratan N Tata, said, ''We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business.
We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact.'' He added that the aim was to support their growth, while holding true to Tata's principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.
As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies.
Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services Ford Motor Company President and CEO Alan Mulally said, ''Jaguar and Land Rover are terrific brands. We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all.'' In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.
Tata and Ford said it believes these arrangements will support Jaguar Land Rover's current product plans, while providing JLR with the freedom to develop its own stand-alone capabilities in the future that will best serve its premium manufacturer requirements. Both Ford and Tata do not anticipate any significant changes to Jaguar Land Rover employees' terms of employment on completion, the statement said.
Tata Motors said Jaguar Land Rover's employees, trades unions and the UK Government were updated with developments as the sale process progressed and had indicated their support for the agreement.
Founded in 1922, Jaguar has been amongst the premium brands for luxury saloons and sports cars. Since its very first design appeared in 1948, Land Rover has always been universally identified as the ultimate in four-wheel drive vehicles.
Jaguar and Land Rover have been under Ford's ownership since 1989 and 2000 respectively. The two together have about 16,000 employees.
Ford acquired Jaguar for 2.5 billion dollars in 1989 and Land Rover for 2.75 billion dollars in 2000 but put them on the market last year after posting losses of 12.6 billion dollars in 2006 - the heaviest in its 103-year history.
Tata's deal to buy the two brands for 2.3 billion dollars seem to be cheap, but given the current credit crisis and the negative sentiments, a lot would now depend on how efficiently Tata is able to intergrate the two brands in its portfolio.
However, the markets did not react positively to the news of the deal, which has been filtering through out the day. Tata Motors shares today fell 4.43 per cent on the Bombay Stock Exchange after news surfaced that the homegrown auto major has signed a deal to acquire JLR.
Tata Motors scrip, which had a gap-up opening of 1.47 per cent at Rs 690 from its previous close of Rs 679.95, later parted with its initial gains.
It was in June 2007, that Ford announced its decision to sell the JLR brands and in August 24, 2007 Tata Motors confirmed that it was in the fray to acquire the brands.
Tata was named by Ford as the preferred bidders on January 3, 2008 after it beat off competition from fellow-Indian competitor Mahindra&Mahindra and an American buy-up specialist One Equity, headed by former Ford Chief Executive Jacques Nasser.