DETROIT (March 26, 2008) — Ford Motor Co. has agreed to sell its Jaguar and Land Rover operations to India's Tata Motors Ltd. for $2.3 billion.
Ford, however, agreed to infuse $600 million into the Jaguar and Land Rover pension funds after the deal closes around the end of June. The transaction remains subject to various regulatory approvals.
The sale of the two European brands culminates a key part of Ford's ongoing restructuring program, which is expected to improve the company's focus on its core Ford brand.
The final proceeds to Ford will be $1.7 billion after the sale is completed and the pension plans are funded. Ford will retain no ownership stake in the British brands, a company spokesman confirmed March 26.
Most of the Jaguar-Land Rover management team, including CEO Geoff Polites, will transfer with the operation to Tata, a Ford spokesman said.
“Jaguar and Land Rover are terrific brands,” Ford CEO Alan Mulally said in a statement.
“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 part of the transaction, Ford said it would continue to supply Jaguar and Land Rover “for differing periods” with powertrains, stampings and other vehicle components along with a variety of technologies.
The length of supply arrangements differ depending on the component. Ford declined to say how long the supply arrangements run for specific components.
Ford Motor Credit Co. also will provide financing for Jaguar and Land Rover dealers and customers for up to 12 months.
Ford and Tata said they don't expect any significant changes to Jaguar and Land Rover employees' terms of employment on completion.
“We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact,” Tata Chairman Ratan Tata said in a statement.
“We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business,” he added.
Tata, India's top vehicle maker, has been in talks with Ford since it was chosen as the frontrunner to buy Jaguar and Land Rover a few days into 2008.
Tata is pursuing the deal to gain a substantial foothold outside India.
But analysts have questioned how Tata will incorporate the luxury brands into its stable of sturdy trucks and functional passenger cars, including the Nano, the world's cheapest car, which it unveiled in January.
While Land Rover has generated three years of record sales with its sport-utility vehicles, the fit of Jaguar is far less clear. Ford—which lost $2.7 billion in 2007 and $12.6 billion in 2006—is selling off Jaguar and Land Rover to focus on turning around its loss-making operations in North America.
The sale will include a commitment by Tata to continue buying engines from Ford, according to trade unions.
All Jaguar and Land Rover gasoline engines are built in a Ford plant in South Wales, supporting hundreds of jobs there. Diesel engines come from Ford's factory in Dagenham, east London.