8/4/2019 A Case of Tata Jagaur Acqusition
1/19
A CASE OF TATA-JAGAUR
ACQUSITION
8/4/2019 A Case of Tata Jagaur Acqusition
2/19
TATA MOTORS
Formerly known as TELCO (TATA Engineering and
Locomotive Company).
Part of the Tata Group, and one of the world's largestmanufacturers of commercial vehicles.
India's largest passenger automobile and commercial vehiclemanufacturing company.
Tata Motors was established in 1945, when the companybegan manufacturing locomotives.
The company manufactured its first commercial vehicle in
1954 in a collaboration with Daimler-Benz AG, which endedin 1969.
8/4/2019 A Case of Tata Jagaur Acqusition
3/19
Company Profile
It is the 5th largest medium and heavycommercial vehicle manufacturer inthe world. listed in BSE, NSE &
NYSE.
Subsidiaries-
JAGUAR CARS LAND ROVER
TATA DAEWOO COMMERCIAL
8/4/2019 A Case of Tata Jagaur Acqusition
4/19
Jaguar
Jaguar was founded as the Swallow SidecarCompany by Sir William Lyons in 1922,originally making motorcycle sidecars.
The Jaguar name first appeared in 1935.
The company's product was - a 2.5L sedan
named the SS Jaguar, where "SS" stood for"Swallow Sidecar".
It adopted the "Jaguar" name in 1945.
8/4/2019 A Case of Tata Jagaur Acqusition
5/19
..cont Jaguar went through a lot of mergers and de-
mergers.
It bought the Daimler Motor Company, in 1960.
Jaguar merged with the British Motor Corporation(BMC) to form British Motor Holdings (BMH) in1966.
Then came the merger with Leyland in 1968,which had already acquired Rover and StandardTriumph.
The resultant entity was named the BritishLeyland Motor Corporation (BLMC).
8/4/2019 A Case of Tata Jagaur Acqusition
6/19
..cont
Jaguar was floated on the LondonStock Exchange in 1984.
Then, it was purchased by the FordMotor Company in 1990 for $2.5billion.
8/4/2019 A Case of Tata Jagaur Acqusition
7/19
TATA MOTORJAGUAR deal
process12/06/2007- Announcement from Ford that it plans to sell
Land Rover and Jaguar.
August 2007 - Major bidders were identified
Likely buyers: Tata Motors, M&M, Ceribrus capitalManagement, TPG Capital, ApolloManagement
Indias Tata Motors and M&M arrive as top bidders ($2.05b
& $1.9b)
03/01/2008 Ford announces Tatas as the preferredbidders
26/03/2008 - Ford agreed to sell their Jaguar Land Roveroperations to Tata Motors.
8/4/2019 A Case of Tata Jagaur Acqusition
8/19
Why was Ford selling?
Reports said losses at Jaguar stood at USD 715 million
in 2006. Jaguar has been a dog i.e. it has not been ableto provide any profit for ford because of the highmanufacturing costs provided in the United Kingdom.
The strong boy Land Rover's profit, on the other hand,
was driven by the record sale of 2.26 lakh vehicles, an18% YoY growth in 2007.
Bringing down production costs and turning around thecompany successfully was the challenge.
It was a test that Ford failed. Ford is combining both the brands since the products
and manufacturing of vehicles for Land Rover andJaguar is so intertwined.
8/4/2019 A Case of Tata Jagaur Acqusition
9/19
Why Tata acquired JLR?
Long term strategic commitment to automotive sector.
Opportunity to participate in two fast growing autosegments.
Increased business diversity across markets and products.
Land rover provides a natural fit for TMLs SUV segment.
Jaguar offers a range of performance/luxury vehicles tobroaden the brand portfolio.
Benefits from component sourcing, design services and lowcost engineering.
8/4/2019 A Case of Tata Jagaur Acqusition
10/19
Provides services likesupplier programs,consulting services andglobal outsourcing.
Customers includeChrysler, Ford, GM etc.
Provides engineering design,manufacturing solutions andsourcing services.
Major customer includeChrysler, Ford , GM etc.
Leader in the automativegrade steel.
16% of revenue fron autosteel division.
TAMO's flagshipancillary biz.
Customers inc. Ford,Daimler, FIAT etc.
TACO
TATA
Corus
INCATTCS
8/4/2019 A Case of Tata Jagaur Acqusition
11/19
Tata-JLR Merger Agreement100% stake in Jaguar& land Rover
Business
TAMO has acquired the business & initially they will be operatedindependently of the partner.
3 Plants in UK These are well invested plants
2 advanced design& engineering
center
4-5000 engineers engaged in testing, prototype design &powertrain
Engineering, development & integration.26 National salescompany
Both existing national sales companies of jaguar/land rover & alsothose that are carved out of current Ford operation
Intellectual propertyrights
This covers all key technologies to be transferred to JLR &perpetual royalty free license on technologies shared with Ford
Capital Allowance A minimum guaranteed amount of $1.1 bn which will helpmanaging in Tax going forward
Support from FordMotor Credit
Ford Motor Credit will continue to support the sales of JLR foraround next 12 months
PensionContributed by Ford
Ford will contribute $ 600 mn of the Pension Fund
8/4/2019 A Case of Tata Jagaur Acqusition
12/19
TATA - JLR deal
Tata Motors raised $3 billion (about Rs 12,000crore) through bridge loans for 15 months from aclutch of banks.
JP Morgan, Citigroup, and State Bank of India.
Tata came under cash crisis because of theCorus deal and the huge investments in the TATANano project.
The credit rating companies also took a negativeoutlook toward this deal because of the hugedebt requirement to complete the deal.
8/4/2019 A Case of Tata Jagaur Acqusition
13/19
TATA Merger with JLR
FORD
JLRTATA
MOTORS
TATAGROUP
Forward Triangular Merger
Subsidiary of TATA GROUPSubsidiary of FORD
8/4/2019 A Case of Tata Jagaur Acqusition
14/19
Type of merger
Market Extension
Cross Border
8/4/2019 A Case of Tata Jagaur Acqusition
15/19
Financial Impact
Total acquisition cost at $3bnassumed to be debt-funded onTAMOs books.
Financial Impact: Leverage increased.
Headline Debt/Equity of TAMOincreased to 2.5x from 1x.
8/4/2019 A Case of Tata Jagaur Acqusition
16/19
LEVERAGE BUYOUT - Definition
The acquisition of another company using a
significant amount of borrowed money (bonds or
loans) to meet the cost of acquisition. Often, the
assets of the company being acquired are used ascollateral for the loans in addition to the assets of
the acquiring company. The purpose of leveraged
buyouts is to allow companies to make largeacquisitions without having to commit a lot of
capital.
8/4/2019 A Case of Tata Jagaur Acqusition
17/19
Is deal really worth it?
There was immense pressure from the shareholders,analysts community etc. to abort the deal.
Because it was over priced and the balance sheet of TATAwas not in a position to absorb more loan.
Ford purchased JLR at $5 bn and sold at almost half the priceto TATA after operating it for losses for few years.
As the market would have recovered from recession thevaluation would have increased.
Tata would not have been able enter into the premiumsegment (>10 lakhs) in India.
TAMO would have lacked in robust designing capabilities.
8/4/2019 A Case of Tata Jagaur Acqusition
18/19
References
http://www.tata.com/company/releases
http://wikipedia.com
http://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-
Road-Ahead
http://domainb.com
http://www.tata.com/company/releaseshttp://wikipedia.com/http://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://domainb.com/http://domainb.com/http://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://www.123jump.com/market-analysis/Tata-and-Jaguar-Rough-Road-Aheadhttp://wikipedia.com/http://www.tata.com/company/releases8/4/2019 A Case of Tata Jagaur Acqusition
19/19
THANK YOU
Presented By:Anurag
MBA (3rd Sem)