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Shvoong Home>Society & News>News Items>The Economic Times Summary

The Economic Times

Article Summary   by:tushmish    
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Tata''s Acquisition OF Jaguar & Land Rover

Tata Motors on Wednesday announced that it has entered into a definitive
agreement with the Ford Motor Company for the purchase of Jaguar Land Rover,
comprising brands, plants and Intellectual Property Rights. The transfer of
ownership to Tata Motors is expected to close by the end of the next quarter,
subject to applicable regulatory approvals.The total amount to be paid in cash
by Tata Motors for Jaguar Land Rover upon closing will be approximately $2.3
billion. As part of the transaction, Ford will continue to supply Jaguar Land
Rover with vehicle components, in addition to a variety of technologies and
engineering support, which include research and development, as well as
information technology. Moreover, Ford Motor Credit Company will provide
financing for Jaguar and Land Rover dealers and customers during a transitional
period, which can vary by market,

Effect on stocks

Soon after the news surfaced that the home-grown auto major has signed the deal,
its shares fell 4.43 per cent on the BSE, before finally closing flat. Tata
Motors scrip that opened firm at Rs 690, up 1.47 per cent from its previous
close of Rs 679.95, later parted with its initial gains. It touched an
intra-day low of Rs 651.10, a fall of 4.43 per cent over its last close.“The
cost of borrowing would be expensive and in the short term, and profitability
would be affected. As many as 4.57 lakh shares changed hands on the BSE till
12.53 hours on march 28th. At the day’s end, however, the scrip finally gained
ground to close at Rs 679.40 – almost on par with Tuesday’s closing.“These
deals do not go favourably with big investors.

But despite the volatility shown by the scrip on the bourses, India Inc hailed
the deal.“This is a major landmark for Indian industry and a turning point in
achieving quality and projecting brand – as the Jaguar and Rover represent some
of the highest brand values. Auto major Mahindra & Mahindra, who were also
in the race for acquiring the Ford Motors’ brands, also gave a thumbs-up to the
deal.

The acquisition of the Jaguar and Land Rover brands will make the world sit up
and take notice of India’s
growing prominence in the global automotive arena. I wish Tatas every success
for the future.”

The Indian industry has been doing an extremely good job in acquiring foreign
assets: Tata Motors on Wednesday announced that it has entered into a
definitive agreement with the Ford Motor Company for the purchase of Jaguar
Land Rover, comprising brands, plants and Intellectual Property Rights. The
transfer of ownership to Tata Motors is expected to close by the end of the
next quarter, subject to applicable regulatory approvals. The total amount to
be paid in cash by Tata Motors for Jaguar Land Rover upon closing will be
approximately $2.3 billion. As part of the transaction, Ford will continue to
supply Jaguar Land Rover with vehicle components, in addition to a variety of
technologies and engineering support, which include research and development,
as well as information technology.

Moreover, 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.
Published: March 28, 2008   
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