This presentation will give you an overview of the acquisition held between two major giants, Tata Motors and Ford Motor Company.

1. TATA Motors’
Acquisition of
Jaguar and Land Rover
Presented By:-
Santosh Kumar Gupta (65)

3. ROADMAP OF PRESENTATION
ROADMAP
Objectives of acquisition
Deal is all about
Possible outcomes and challenges
Strategies
conclusion

4. Objectives of Acquisition
• Tata Motors’ objective:-
To establish its presence in the high-end
premier segment of the global automobile
market.
• Ford Motor Company’s objective:-
To shore up own core business with the help
of shutting down unprofitable operations.

5. DEAL is all about
PRICE
• $ 2.3 bn for 100% of JLR
• Assets Purchased :
3 major UK manufacturing plants
2 advance design centres
26 National Sales Companies (existing and to be carved
out of Ford operation),
• Debt free on Completion
ACQUISITION STRUCTURE
• Establishment of Special Purpose Vehicle
(SPV) in Singapore and UK.

6. DEAL is all about (cont….)
Sources of Finance
• $3bn debt facility in the SPV (guaranteed by TML) plus TML cash
resources -Sufficient to meet purchase price and contingencies
• Bridge finance for 15 month period
• Plans to raise debt at JLR level for on-going working capital
requirements
Selected other Contractual Terms
• Pension Liability
• Ford to provide continuity of critical supplies such as engines,
access to test facilities, IT, accounting and other services for an
agreed period

7. POSSIBLE OUTCOMES
Favorable outcomes :-
• To spread its business across different geographies
and across different customer segments,
• Opportunity to move into the Premium car and SUV
segment with access to two world class, iconic brands,
• Long term benefits from component sourcing, low
cost engineering and design services.
• It would reduce the company’s dependence on the
Indian market, which accounted for 90% of its sales.

8. POSSIBLE OUTCOMES
Unfavorable outcomes or Challenges :-
• Need of huge capital expenditure to revive the
fortunes of Jaguar and Land Rover,
• No experiences in these segments,
• Tough competition with Volkswagen, Daimler,
and BMW,
• Impact on profitability of Tata Motors in the near
future,
• Slowing down of the European and US
automobile markets.

9. Strategies
• Funding of JLR Acquisition
• Tata Motors must need to refinance $3 billion of the JLR acquisition
bridge loan by June ’09.
• Company have raised $1.1 bn through issue of equity shares. but it
still leaves $1.9 bn which needs to be raised via a combination of
foreign equity issuance ($500 million), sale of stakes in subsidiaries
($670 million) and raising of working capital facilities at JLR ($700
million).
• Funding of future growth requirements
Financing support available to Tata Motors’ products going forward:
• Tata Motors
• TMFL (subsidiary of Tata Motors)
• Tata Capital ( financial services company formed by Tata Group also
engaged in Vehicle financing )

10. Strategies to handle key challenges
Profitability concerns in rising cost environment:-
• Cost reduction efforts
Pursue on going cost reduction efforts –
vendor rationalization, value engineering etc.
• Grow non-vehicle business :
Vehicle financing, spare parts, services,
accessories, Engineering design services etc

11. Strategies
Impact of JLR acquisition and integration challenges:-
• Transitional Support :
• Long term arrangements with Ford for supply of engines
and other components.
• Independence of operation :
• JLR’s operations would be autonomous of TML and
• it is intended that the existing management of JLR will
continue
• Pension Deficit :
• Pension trustees have agreed to shift the next valuation
year.

12. Strategies
Slowing down of the European and US automobile markets:-
concentration on these countries
• Russia (LR-3RD and Jaguar-8th )
• China (LR-5TH and Jaguar-7th )
• India
• The Middle East
• South Africa
• Thailand
introducing new models
• which compete other competitor’s models (Jaguar XF)

13. Conclusion
Tata Motors is well poised to emerge as the leading auto-
mobile player in the world automotive market in coming years.
Combining capabilities and cost advantage to emerge as a
world class automotive company
Over 100 new About 150% Improve revenue Prudent
Increase in Develop Continue
products / stability through capital
customer expertise to grow
variants are geographical investment
planned for touch through
expansion & policy and the non-
points strategic vehicle
introduction growing aggressive
across India alliance / business
in coming 4-5 noncyclical auto cost
acquisition
years segments reduction
Strong brand equity