INDIA BUSINESS WORLD - March 16^th - March 31^st - 2008

TATAS CLINCH JAGUAR-LAND ROVER FOR $2.3-BILLION

Ford Motors on March 26 handed over the keys of its marquee brands Jaguar-Land Rover (JLR) to Tata Motors for about $2.3 billion in an all-cash deal. Under the deal, Ford would pay about $600-million towards the pension liabilities of Jaguar-Land Rover employees and Tata Motors would continue to source engines from Ford. The acquisition cost of $2.3 billion would be financed by a bridge loan, which will be raised through a syndicate of banks. The bridge money will be replaced by a combination of long-term debt and equity at an appropriate time. The company will raise funds to finance its equity contribution by selling a portion of its stake in some of its subsidiaries in the next few months. However, the final acquisition cost of the JLR brands is likely to be about $3-billion, as the announced acquisition cost of $2.3-billion covers just the price of the brands, assets and technology knowhow. A big part of the additional cost would go for engine and component supply. A Ford Motor spokesperson confirmed that a separate contractual pact has been signed for engines and components