TATA MOTORS AND JAGUAR
Acquisition
•When one company takes over another and clearly
established itself as the new owner, the purchase is
called an acquisition.
•Acquisition is generally considered negative in nature
SYNERGIES RELATED TO ACQUISITION
Staff reductions
Acquiring new technology
Improved market reach and industry visibility
Takeovers
A corporate action where an acquiring company makes
a bid for an acquiree . If the target company is publicly
traded, the acquiring company will make an offer for
the outstanding shares.
: Takeover
Takeover might beFriendly
Hostile Takeover Target company's
A takeover attempt that is management and board of
strongly resisted by the directors agree to a merger or
target firm acquisition by another
company.
WHY SHOULD FIRMS TAKEOVER?
To gain opportunities of market growth more quickly.
To seek to gain a more dominant position in a national
or global market
To acquire the skills or strengths of another firm.
To acquire a speedy access to revenue
To diversify its product or service range to protect itself
against downturns in its core markets
Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1
Tata Steel buys Corus Plc
billion
Hindalco acquired Novelis USD 6
Inc. billion
USD 2.3
Tata buys Jaguar and Land Rover
billion
USD 1.58
Essar Steel acquired Algoma Steel
billion
Suzlon Energy Ltd. acquires USD 1.6
REpower billion
7
THE DEAL………………
•Location: Dearborn,
Michigan
•Founded: 1903 by Henry
Ford
•Competitors: General
Motors, Toyota
•Brand names: Lincoln,
Mercury, Volvo, Mazda,
Jaguar and Land Rover
Henry Ford and his Model T
•CEO: Alan Mulally
Jaguar: The ups and downs
1922 - Founded in in Blackpool as Swallow Sidecar
company
1960 - Jaguar name first appeared in 1935
1975 - Nationalized in due to financial difficulties
1984 - Floated off as a separate co in the stock market
1990 - Taken over by Ford
Jaguar: The ups and downs
A statement of ultra luxury
Holds Royal warrants
Rarely advertised
Ford’s formula one entry since 1990s
Why acquire Jaguar
Long term strategic commitment to automotive sector
Opportunity to participate in two fast growing auto segments
(premium and small cars) and to build a comprehensive
product portfolio with a global footprint immediately
Increased business diversity across markets and product
segments
Unique opportunity to move into premium segment with access
to world class iconic brands.
Jaguar offers a range of “Performance/Luxury” vehicles to
broaden the brand portfolio.
Sharing of best practices between Jaguar, Land Rover and Tata
Motors in the future
The Deal Process
July 2007- Announcement from Ford that it plans to
sell Land Rover and Jaguar.
August 2007 - Major bidders are identified
The Deal Process
Likely buyers
Tata Motors
M&M
Ceribrus capital Management
TPG Capital
Apollo Management
The Deal Process
India’s Tata Motors and M&M arrive as top bidders ($
2.05b & $ 1.9b)
Jan 2008 – Ford announces Tata as the preferred
bidders
March 2008 - Ford agreed to sell their Jaguar Land
Rover operations to Tata Motors.
June 2008 – The acquisition is complete
TATA MOTORS – A SNAPSHOT
TATA GROUP – 150 YEAR OLD
Previously Tata Engineering and Locomotive
Company, Telco
Tata Motors’s break-even point for capacity utilization
is one of the best in the industry worldwide
listed on the New York Stock Exchange in 2004
Ratan tata says
• 'We have enormous respect for the two
brands and will endeavor to preserve and
build on their heritage and
competitiveness, keeping their identities
intact,' he said in a statement.
Why acquire JLR?
Is TATA catching a falling knife…or
Long term strategic commitment to automotive sector.
Opportunity to participate in two fast growing auto segments.
Increased business diversity across markets and products.
Land rover provides a natural fit for TML’s suv segment.
Jaguar offers a range of “performance/luxury” vehicles to
broaden the brand portfolio.
Benefits from component sourcing,design services and low
cost engineering.
Tata and the dream…
NEED FOR GROWTH
In the past few years, the Tata group has led the growing
appetite among Indian companies to acquire businesses
overseas in Europe, the United States, 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, with
revenues of $7.2 billion in 2006-07. With over 4 million Tata
vehicles plying in India, it is the leader in commercial vehicles
and the second largest in passenger vehicles.
Result
ACTUAL 2.3 BILLION $
VALUATION 2.80 BILLION $
by- AVI
