Ford Lines Up Jaguar & Land Rover Buyers

[JoeT]

Three To Fight For Ford European Brands

Mathieu Robbins
13 November 2007
www.drive.com.au

US automaker Ford has narrowed the auction of its Jaguar and Land Rover marques to three bids, two of them involving Indian companies.

US automaker Ford Motor Co has narrowed the auction of its Jaguar and Land Rover marques to three bids, two of them involving Indian companies, people familiar with the matter said on Monday.

Indian carmaker Tata Motors as well as rival Mahindra & Mahindra, which has teamed up with buyout firm Apollo, are both set to make third round offers for the British luxury brands.

One Equity Partners, a buyout firm funded by US investment bank JP Morgan, is also on the list, the sources said.

Ford is struggling with declining sales and a falling US market share and announced last week it was nearing a deal to shed Jaguar and Land Rover. At the time it posted a third quarter net loss of $380 billion ($A420.14 billion), compared with losses of $5.2 billion ($A5.75 billion) a year earlier.

Ford has been exploring the sale of the brands since June as it continues a global strategic review which led in March to the sale of Aston Martin to a Kuwait-backed consortium in a 480 million pounds ($A1.11 billion) deal.

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Ford Lines Up Jaguar & Land Rover Buyers

Mark Milner
31 October 2007
www.drive.com.au

Upmarket British brands Jaguar and Land Rover are set to be sold within six months, with the Ford Motor Company ready to announce its preferred bidders.

Ford is expected to draw up a shortlist of preferred bidders for Jaguar and Land Rover next month with six companies still in the race to buy two of Britain's most prestigious car marques.

The car maker said it hoped to reach a conclusion by the end of the year or by early next year. But it is becoming clear that deciding the future of Jaguar and Land Rover has proved more complex than expected.

The two companies, which are being sold together, are attracting attention from trade and private equity buyers.

India's Tata group, which bought the steel maker Corus this year, is one of the frontrunners, alongside the private equity groups One Equity, whose interest is led by the former global chief executive of Ford and chief executive of Ford Australia, Jac Nasser; Ripplewood and TPG.

Terra Firma and Cerberus, which bought Chrysler this year, are seen as being in the running, though industry sources have questioned whether Cerberus would be willing to take on two big automotive acquisitions so close together.

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[camaro_freak]

as long as VOLVO stays OFF the chopping block then I have no problem with this...

[Mikkoo]

Originally Posted by camaro_freak

as long as VOLVO stays OFF the chopping block then I have no problem with this...

I'm in total agreement with you. Volvo is a valuable entity of Ford, and
has provided leadership in safety.!

[CamaroCrazy]

Originally Posted by JoeT

Terra Firma and Cerberus, which bought Chrysler this year, are seen as being in the running, though industry sources have questioned whether Cerberus would be willing to take on two big automotive acquisitions so close together.

Oh wow, I never thought Cerberus would be involved. Sounds like a long shot to me, but can you imagine what an unholy alliance that would be? Chrysler-Jaguar-Land Rover, all owned by Cerberus? That would really shake things up in the automotive world.

[carscomblogger]

Originally Posted by CamaroCrazy

Oh wow, I never thought Cerberus would be involved. Sounds like a long shot to me, but can you imagine what an unholy alliance that would be? Chrysler-Jaguar-Land Rover, all owned by Cerberus? That would really shake things up in the automotive world.

Can you imagine having that many brands be at the bottom of every reliability list?! And I thought Chrysler/Mercedes was bad.

[CADILLACSIXTEEN]

Originally Posted by CamaroCrazy

Oh wow, I never thought Cerberus would be involved. Sounds like a long shot to me, but can you imagine what an unholy alliance that would be? Chrysler-Jaguar-Land Rover, all owned by Cerberus? That would really shake things up in the automotive world.

That would destroy Jaguar and Land Rover...

Hey...my Jag and Range have a HEMI!!!

[nadepalma]

The very fact that Tata is involved in the bidding --- and is at the forefront --- may very well mean that Fiat S.p.A. may be behind this as well.

Fiat won't take a direct stake in any Jag/Land Rover pairing --- mostly b/c it will kill their impressive rebound and dilute their credit rating.

However, Fiat does have agreements with Tata and has said they'd be willing to help if Tata wins out over other bidders.

In addition, Tata has taken on large acquisitions before -- mostly in the steel and bus industries.

As such, there is a chance LR/Jag will end up in Indian hands.

But what does Fiat get out of it? Aside from a partner to develop platforms and technolgies with (economies of scale will benefit both sides as Fiat pushes to expand Maserati and now switch Alfa Romeo to almost an all-RWD lineup), Fiat also gets greater access to the American/Canadian markets. The dealer networks are established. Fiat needs locations to relaunch Alfa Romeo, but also to expand Maserati --- and perhaps one day relaunch Fiat or Lancia (rumors are that the 500 Abarth might make it Stateside one day).

So Tata may be the point-company on this --- but there is no doubt Fiat has a hand in this as well.

Intersting to see how this plays out in the coming months...

Ford is unlikely to make a decision simply on price. It is determined to maintain contracts to supply engines to Jaguar and Land Rover after the sale and may retain a stake in the brands, similar to its 10 per cent holding in Aston Martin after its sale this year.

The engine deal I'm almost certain of, but to retain a stake is more unlikely. Ford CEO Mulally has already gone on record that he doesn't want to retain a stake in either company after the sale. He wants to cut equity ties. You can sell engines and technologies without being exposed to their performance in the market.

It would seem that retaining a stake in Aston Martin Lagonda may have been a one-time thing --- and a small company like AML will have a much much smaller impact on FoMoCo's bottomline than larger entities like LR/Jag

[Clownzilla]

Originally Posted by camaro_freak

as long as VOLVO stays OFF the chopping block then I have no problem with this...

Exactly! Volvo and Mazda are the only two non-core brands Ford will ever need. They contribute to the success of Ford, unlike the useless Jaguar and Land Rover. Don't get me wrong. I love Land Rovers and Jaguars, but they are only sucking Ford dry.

[lio45]

Originally Posted by carscomblogger

Can you imagine having that many brands be at the bottom of every reliability list?! And I thought Chrysler/Mercedes was bad.

Care to show us reliability lists where Chrysler/Dodge/Jeep are at the bottom?

[Geotpf]

Land Rover is doing well. Jaguar is...um...not. I can see why they would sell the pair together-if you want the cream, you have to take the crap, too.

[Chaz_23]

Looks like Vultures-Are-Us wants to be like Ford under Nasser.
Give it to Terra Firma, at least they are Brits, of sort.

[skylark68]

Originally Posted by nadepalma

But what does Fiat get out of it? Aside from a partner to develop platforms and technolgies with (economies of scale will benefit both sides as Fiat pushes to expand Maserati and now switch Alfa Romeo to almost an all-RWD lineup), Fiat also gets greater access to the American/Canadian markets. The dealer networks are established. Fiat needs locations to relaunch Alfa Romeo, but also to expand Maserati --- and perhaps one day relaunch Fiat or Lancia (rumors are that the 500 Abarth might make it Stateside one day).

Very interesting point. I can see Fiat having a stake in this acquisition.

OT - Is Alfa really pursuing a switch to RWD? That would be nice, especially for an eventual U.S. release.

[nadepalma]

Originally Posted by Clownzilla

Exactly! Volvo and Mazda are the only two non-core brands Ford will ever need. They contribute to the success of Ford, unlike the useless Jaguar and Land Rover. Don't get me wrong. I love Land Rovers and Jaguars, but they are only sucking Ford dry.

I agree 1000%. Mulally has already stated that Mazda is "safe" and is part of the plan moving forward. This is good. For all we know, as FoMoCo takes moer "processes" from Mazda an integrates them into their own, perhaps Ford may even up their stake in the company to more fully realize synergies.

Its Volvo that worries me. I think that Volvo should remain a core part of the company and is Ford's only "global luxury" player. To get rid of Aston Martin Lagonda, Jaguar and Land Rover is one thing -- they either made little money or lost a few bucks collectively. But to get rid of the only brand that not only makes money, but has enormous growth potential is something else entirely. This is also very much true in light of FoMoCo's "mismangagement" of both Lincoln and Mercury. At one time they were luxury/entry- or near-luxury respectively ---- but far from it now. As such, you could not or would not sell Lincoln internationally in the shape that it is in currently. This is even MORE of a reason to keep a high-profit/high-profile brand like Volvo in the FoMoCo fold.

But hey, that's just me.

[nadepalma]

Originally Posted by skylark68

Very interesting point. I can see Fiat having a stake in this acquisition.

OT - Is Alfa really pursuing a switch to RWD? That would be nice, especially for an eventual U.S. release.

Thanks.

Yes, Alfa is looking to switch to all RWD with the exception of the upcoming "Junior/Alfa Sud"-spiritual successor. It will be built off a modified version of the Fiat Grande Punto platform and compete with the Mini/Upcoming Audi A1. Other than this product, all other future Alfa's are going to switch to RWD.

I'm actually going to post something on the GMI about this shortly and will let you know....The story is a few days old, but I havent had a chance to post b/c of work being hectic.

[megeebee]

Good Lord, this is taking forever.