Tata mo.final


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Tata mo.final

  1. 1. Merger and Acquisition(Tata motors and Jaguar &Land rover) Name: JYOTI Roll no. :27 Course: MBA
  3. 3. INTODUCTION TO THE TOPICAcquisition in general sense is acquiring the ownership in the property.When a company is acquired by another company, the acquiring company has two options:• Merge both the companies into one and operate as singMerger has been defined as an arrangement whereby the assets of two or more companies become vested in, or under the control of one company entity .
  4. 4. Overview
  5. 5. TATA MOTORS – A SNAPSHOT• TATA GROUP is 150 year old, Previously Tata Engineering and Locomotive Company, Telco.• Indias largest passenger automobile and commercial vehicle.• Tata Motors was established in 1945• Listed on the New York Stock Exchange in 2004.
  6. 6. Jaguar and land rover• Jaguar and land rover(informally JLR) is a british automotive company.• Jaguar in 1975 - Nationalized in due to financial difficulties• 1990 - Taken over by Ford• Founded in 1948 as a marquee of the Rover Company.• Known for superior off-road performance, Used by military for projects and expeditions, Safe but less reliable, Makeover in recent times• In 1994 Rover Group is taken over by BMW & sold to FORD MOTORS for 2.75 bn$ in 2000
  7. 7. KEY ISSUES• Ford acquired Jaguar for $2.5 billion in 1989.• Ford acquired Land Rover for $2.75 billion in 2000.• But the US auto major put the two marquees on the market in 2007 after posting losses of $12.6 billion in 2006 - the heaviest in its 103-year history.
  8. 8. Why is Ford Selling?• Reports said losses at Jaguar stood at USD 715 million in 2006.• The Land Rovers profit, on the other hand, was driven by the record sale of 2.26 lakh vehicles, an 18% growth in 2007.• Bringing down production costs and turning around the company successfully will be the challenge-Its a test that Ford failed.• Ford is combining both the brands
  9. 9. THE DEAL PROCESS• 12/06/2007- Announcement from Ford that it plans to sell Land Rover and Jaguar.• August 2007 - Major bidders are identified• Likely buyers: Tata Motors, M&M, Ceribrus capital Management, TPG Capital, Apollo Management• India’s Tata Motors and M&M arrive as top bidders ($ 2.05b & $ 1.9b)• 03/01/2008 – Ford announces Tatas as the preferred bidders• 26/03/2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors.• 02/06/2008 – The acquisition is complete
  10. 10. Tata Motors’ Financial Performance (In Rs. Million) Q3FY09 Q3FY08 9MFY09 9M FY 08Revenue 47,586.2 72,518.3 187,659.2 199,813.0EBITDA 916.5 8,197.4 11,186.3 21,608.6Profit before Tax (4191.5) 6651.0 2839.5 18,784.2Net Profit (2632.6) 4990.5 4098.4 14,926.5 Volume SummaryTotal Commercial Vehicles 49,546 82,5568 195,192 215,313Total Passenger Vehicles 42,187 49,284 142,507 153,475Exports 7,027 12,756 29,177 40,488Total Volumes 98,760 144,608 366,876 409,276
  11. 11. Why Tata acquire JLR?• Long term strategic commitment to automotive sector• Opportunity to participate in two fast growing auto segement• Increased business diversity across market and product• Jaguar offer a range of “performance/luxury” vehicles• Benefits from component sourcing, design services and low cost engineering.
  12. 12. Benefits• Tata wanted to make a global impact and it thinks that buying these brands at a lower rate now, will give better value later on.• This acquisition also eases the entry of Tata in European market which it has been eyeing for long. A previous JV with FIAT took place, this will further help them penetrate EU market.
  13. 13. • Increase sales in emerging markets• Reduce dependence on mature markets• Opportunity to spread its business across different customer segment• Reduce the company dependence on the Indian market which accounted for 90% of its sales
  14. 14. SWOTStrengths: Weaknesses:Tata’s strong management Jaguar’s declining sales recordcapability Inexperience of handling suchStrong monetary base to invest luxury brands Tata’s Jaguar Land RoverOpportunities: AcquisitionSupport from Ford in terms ofTechnology,Engine, IT, Market is volatile and drivenAccounting by new productsAdding up of luxury brands in Strong presence of competitorsthe product line like Mercedes, BMW, LexusAccess to European Market and Infinity
  15. 15. Current status• Jaguar Land Rover global sales in December 2009 were 21,134 vehicles, higher by 33%.• Jaguar sales for the month were 4,794, higher by 5%, while Land Rover sales were 16,340, higher by 45%
  16. 16. THANK YOU