Ford Sale of Jaguar, Land Rover is Near

DETROIT _ Ford Motor Co., eager to raise cash starting a difficult 2008, is in final discussions with one bidder, the Indian conglomerate Tata Group, to sell its Jaguar and Land Rover brands and a sale is expected to be completed soon.

Tata has 98 companies in a variety of industries and has been rumored to be the frontrunner for some time.

“There is still a considerable amount of work to do and, while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned,” Lewis Booth, executive vice president of Ford of Europe and the Premier Automotive Group, said in a statement.

The Premier Automotive Group, created in 1999 to serve as the automaker’s luxury vehicle division, would essentially be dissolved by a sale of the two legendary luxury brands.

Former Ford Chief Executive Officer Jacques Nasser, who was one of the bidders for Jaguar and Land Rover as head of One Equity Partners, assembled most of PAG during his reign from 1999 to 2001.

At one time, Ford’s Premier Automotive Group controlled Aston Martin, Jaguar, Land Rover and Volvo. Lincoln was also part of the division for a brief time, before Dearborn reclaimed control of it in 2002, amid concerns of neglect.

But Ford sold Aston Martin in March 2007 for $848 million, and it was clear Jaguar and Land Rover would be sold together as Ford decided to raise cash to save its ailing North American business.

Both Jaguar and Land Rover are based in Britain and they share management, engineering, manufacturing and distribution resources. Most of their dealerships in the United States, for example, are combined under one roof.

Volvo is the only foreign brand in the group now retained by Ford, and it is widely expected that Ford will work to further integrate with the company. For example, the new Taurus relied substantially on engineering work done by the Volvo team.

In July, Derrick Kuzak, Ford’s group vice president for global product development, told the Detroit Free Press: “Our current product plans are integrated with Volvo.”

While some analysts have speculated Jaguar and Land Rover could fetch as much as $8 billion in a sale, other experts have told the Detroit Free Press that amount would be surprising. Other estimates, from Merrill Lynch & Co., are more conservative for the combined sale, from $1.3 billion to $1.5 billion.

That would be substantially less than Ford paid for the two brands, which were acquired during more financially healthy times. Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000.

But Ford has made it clear that it would shed non core assets in an effort to raise cash as it tries to restore profits to its troubled North American operations by 2009. That money-losing division for the United States, Canada and Mexico, caused Ford to post a record loss of $12.6 billion in 2006.

Ford’s so-called Way Forward turnaround plan calls for closing 10 plants, eliminating more than 40,000 jobs and revamping the company’s lineup of Ford, Mercury and Lincoln products.

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(c) 2008, Detroit Free Press.

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