Ford, Tata closing in on Jaguar deal

Ford Chief Financial Officer Don Leclair said last week the company does not plan to keep a stake in the storied British automakers.

“Our plan right now is to sell the business in its entirety,” Leclair said in a telephone interview with British newspaper the Financial Times. Ford spokesman Bill Collins confirmed the quote as accurate.

Tata, which recently announced plans to build a USD 2,500 car in India, was named the prime bidder for the upscale Jaguar and Land Rover units earlier this month, besting two other finalists, Indian automaker Mahindra & Mahindra Ltd. and US private equity firm One Equity Partners LLC.

The person briefed on the talks, who requested anonymity because the negotiations are private, said Tata and Ford are negotiating an agreement for Ford to keep supplying engines and other technology to Jaguar and Land Rover.

Ford maintained a small stake last year when it sold controlling interest in Aston Martin, the sports car brand immortalized in James Bond films. Ford sold the automaker to holding company Primrose Cove Ltd, receiving USD 848 million but retaining a USD 77 million stake.

The person briefed on the talks said Ford kept the stake in Aston Martin because it didn’t have supply agreements similar to those being negotiated with Tata.

Ford Chief Executive Alan Mulally has said previously he thinks a sale agreement with Tata will come during the first quarter of this year.

In December people close to the negotiations said that potential suitors had submitted bids for both companies that ranged from USD 1.5 billion to USD 2 billion.

Ford spokesman John Gardiner in London would not comment yesterday on when the sale might take place or what was being negotiated.

“We’re not giving any details of our discussions,” he said.

Tata, a sprawling conglomerate that makes everything from automobiles to steel and software, has confirmed that it is negotiating with Ford for the British automakers.

The company long has been a giant in truck and bus manufacturing, but it has sold cars for only about a decade.

It has about a 17 per cent share of India’s market.

Industry analysts have said Ford wants to find a buyer who would preserve the Jaguar and Land Rover heritage and jobs in the UK Ford, which is the top auto seller in the UK, doesn’t want to rankle British customers, they said.

Cash-hungry Ford, which lost USD 2.7 billion last year and USD 12.6 billion in 2006, has been looking to sell Jaguar and Land Rover.

The company has mortgaged assets to continue operations and expects to burn up USD 12 billion to USD 14 billion until 2009, when it plans to return to sustained profitability.

Ford bought Jaguar for USD 2.5 billion in 1989 and Land Rover for USD 2.7 billion in 2000, joining them with Aston Martin and Volvo to form its Premier Automotive Group. Ford has said it has no plans to sell Volvo.