Tata Strategic Acquisition. A case study from CMMU class.

1. STARATEGIC ACQUISITION

2. Acquisition of British Icons
- M&A on June,2008
- US$ 2.3 billion,
cash-debt free
Ford’s Premier Automotive Group (PAG)
High-end luxury cars
High-end SUVs
- Bought on 1989
- US$ 2.5 billion
- Bought on 2000
- US$ 2.7 billion

3. British Marques under Ford
 Ford is a leading automaker and third largest
 multinational corporation in the automobile industry
In 1989 : Jaguar from British Ley Limited
- In 1999 : PAG
- In 2000 : Land Rover (from BMW)
- In 2001 : Some Jaguar model (targeted young)
- In 2002 : Integrating Jaguar and Land Rover
 Range Rover MK 3
- In 2004 : Discovery 3
- In 2006 : Freelander 2
- In 2007 : Dismantle the PAG and sell JLR
 (Jaguar and Land Rover)
Alan Mulally became Ford's President and CEO in September 2006

4. • The Jaguar gradually became known as basically
on old man’s car
• The customers of Jaguar and Land Rover were
seen as being highly nationalistic and brand loyal
• Problem In 2006 : The worst loss in the history of
the company(12.7 billion)
• Solution : Ford needed to sell JLR in order to
salvage the North American business
British Marques under Ford
(http://www.nytimes.com/2007/07/17/business/17auto.htm)

5. • The bids for JLR (3 bidders: Tata Motor, M&M and one Equity Partners)
• JLR : 3 manufacturing sites, 2 advanced design centers, 16,000 workforce
• JLR’s labor union force
• Tata Motor => manufacture in UK, employ more people
• In 2008 : Ford decided on Tata Motor
Jaguar Land Rover ( JLR)
Respect for the two brands …
- Endeavor to preserve and build
on their heritage and
competitiveness, keeping their
identities intact.
- Allowing the management and
employee to bring their
experience and expertise to bear
on the growth of the business.
Ratan Tata, Chairman, Tata Group.

6. TATA Motors’ Acquisition of JLR
• JRL’s manufacturing plants
• Two advanced design centers in the UK
• National sales companies spanning across the world
• Licenses of all necessary intellectual property rights
Part of the purchase consideration
Impact from Acquisition
- Tata Motors was greeted with much hope and enthusiasm.
- Moody’s downgraded Tata Motors’ credit rating from Ba1 toBa2,
citing concerns on company’s finance.

7. Tata Motors entered into an agreement with Ford for the purchase of JLR.
Tata motors acquired the manufacturing plants, 2 advanced design and
engineering centers, and a worldwide network of 26 national sales companies.
Technologies were to be transferred from Ford to JLR.
Ford continues to supply JLR with vehicle components.
- supply new engine (period7-9 years)
- cooperation (no time end)
- financing to dealers & customer (transition period)
Tata committed itself to following ford’s business plan for JLR till 2011.
The deal….

8. The Benefits
• The vehicles from the Tata would have
better technology.
• Benefit from JLR’s service and
distribution networks.
• The deal also included the right to use the
Daimler brand which Jaguar had acquired
in 1960
• The opportunity to across different
geographies.

9. The Benefits
• The opportunity to across different
customer segments, planned to place in the super luxury segment
that Tata would be able to compete both at the low-end and
top-end market.
•TATA Nano: US$ 2,500
JaguarXf: US$ 64,000

10. The Challenges
• A huge capital expenditure during the downturn in
the global automobile industry.
• The lack of synergies, the need of the premium
segment did not go well with
Tata’s existing line-up.
• The difficult economic conditions in the key markets of
JLR including The US and Europe

11. The Challenges
• Tata Motor did not have the
experience in high-end luxury
vehicles market and manufactured.
The X-type, emitted around194 grams of CO₂ per kilometer.
• Reducing the CO₂ emissions
from passenger cars from 160g/km
to130g/km
• The cost of key components.

12. The Road Ahead
- Setting milestones and long-term goals by forming an integration
committee with senior executives from the JLR and Tata Motors.
- Concentrating on countries like Russia, China, India and the Middle East.
5th 7th
3th
8th

13. The Road Ahead
• Tata Motors needed to understand how
to market to the premium segment to
take advantage of the opportunities
provided by the acquisition of JRL.
• The way to managed these brands and
derived synergies from them would hold
the key to the success of JLR’s
acquisition

14. Thank You