India's truck and car-maker Tata Motors announced Monday it had completed its acquisition of Jaguar and Land Rover from ailing US carmaker Ford for 2.3 billion dollars in an all-cash transaction.
In a statement to the Mumbai stock exchange, it said the deal includes the “ownership of Jaguar and Land Rover, all necessary intellectual property rights, manufacturing plants and two Britain-based advanced designing centres.”
Tata Motors had announced the deal earlier this year.
“Jaguar and Land Rover are two iconic brands with worldwide growth prospects. These brands will retain their distinctive identities,” Ratan Tata, chairman of Tata Motors said in the statement.
“We plan to work closely to support the Jaguar-Land Rover team in building the success and preeminence of the two brands,” he added.
David Smith, acting chief executive of Jaguar and Land Rover, will be the new chief executive, the statement said.
The Tata Motors chairman called it a “momentous time” for the Indian group, according to the Press Trust of India (PTI).
“Jaguar and Land Rover will retain their distinctive identities and continue to pursue their respective business plans as before,” Tata said in the statement.
“We recognise the significant improvement in the performance of the two brands and look forward to this trend continuing in the coming years, Tata added.
Acting CEO Smith said the cash purchase spelt a “bright future” for stakeholders.
“We are very pleased with the association with Tata Motors and we look forward to a sustained bright future for the company and its stakeholders,” Smith added, according to the PTI.
Long-term agreements have been forged for the supply of engines and other components to Jaguar-Land Rover.
The purchase, part of the Tata's bid to expand its reach beyond Asia, capped months of talks with Ford Motor Co., which is selling the brands to focus on turning around its North American operations after losing 15.3 billion dollars over the past two years.
Jaguar sales dropped more than 30 percent in the United States and Europe in the first two months of this year year-on-year while Land Rover sales slipped 13 percent in the US and close to eight percent in Europe in the same period, analysts say.
India's Tata Motors is also set to launch the world's cheapest car, Nano, at just 100,000 rupees (2,500 dollars) later this year.
The company says it will raise about 72 billion rupees (1.7 billion dollars) through three simultaneous but unlinked rights issues to finance its purchase of Jaguar and Land Rover.
Besides funding the Jaguar-Land Rover acquisition, Tata will also use the cash to partly finance its Nano project, the PTI quoted unnamed company sources as saying.
Tata Motors, part of the giant Tata Group, last year staged India's biggest foreign takeover when it bought Britain's top steelmaker Corus for 13.7 billion dollars but faced a tough task in financing the buy.
But analysts say that Tata Motors may be taking on too much debt.
The Indian company, whose long-term credit is already rated one notch below investment grade, is seeking to raise funds at a time when the US-led subprime crisis is making investors shun all but the safest debt.
