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Acquisitions & Take-Over
Why should firm take over
Tata motors overview
Jaguar overview
Land Rover overview
Ford motor Company overview
Why acquire Jaguar
Why did ford sell jaguar
Deal Process
Financing Strategy
Conclusions
•When one company takes over another and
clearly establishes itself as the new owner,
the purchase is called an acquisition.
•Acquisition is generally considered negative
in nature
A takeover attempt that is
strongly resisted by the
target firm
Target company's
management and board of
directors agree to a merger or
acquisition by another
company.
• To gain opportunities of market growth more quickly.
• To seek to gain a more dominant position in a national or
global market
• To acquire the skills or strengths of another firm.
• To acquire a speedy access to revenue
• To diversify its product or service range to protect itself
against downturns in its core markets
.
USD 12.1 billion
Tata Steel buys Corus Plc
USD 6 billion
Hindalco acquired Novelis Inc.
USD 1.6 billion
Suzlon Energy Ltd. acquires REpower
USD 1.58 billion Essar Steel acquired Algoma Steel
USD 2.3 billion Tata buys Jaguar-Land Rover
JLR was a part of Ford's Premier Automotive Group (PAG) and were
considered to be British icons.
Jaguar was involved in the manufacture of high-end luxury cars
Jaguar Cars Ltd. ( better known simply as Jaguar) is an automaker
from England, United Kingdom that manufactures luxury and
executive motor car.
• Sir William Lyons founded Jaguar as the Swallow Sidecar Company in
1922, originally making motorcycle sidecars before switching to
passenger cars.
• The name was changed to Jaguar after the second world war due to the
unfavorable connotations of the SS initials.
• British car manufacturer founded in 1948 as a marquee of the
Rover Company.
• Known for superior off-road and road performance
• 1976 – 1 million cars running on the road
• In 1994 Rover Group was taken over by BMW
• Sold to FORD MOTORS for $ 2.75 b in 2000.
• Used by military for projects and expeditions, Safe but less
reliable, Makeover in recent times
• Land Rover manufactured high-end SUVs.
•Location: Dearborn, Michigan
•Founded: 1903 by Henry Ford
•Competitors: General Motors, Toyota
•Brand names: Lincoln, Mercury, Volvo, Mazda, Jaguar and Land Rover
•CEO: Alan Mulally Henry Ford and his Model T
• 1922 - Founded in Blackpool as Swallow Sidecar
company
• 1960 - Jaguar name first appeared in 1935
• 1975 - Nationalized in due to financial difficulties
• 1984 - Floated off as a separate co in the stock market
• 1990 - Taken over by Ford
• A statement of ultra luxury
• Holds Royal warrants
• Rarely advertised
• Ford’s formula one entry since 1990s
• July 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
NEED FOR GROWTH
In $ million
Particulars TAMO JLR Consolidated
Net tangible assets 2510 2246 4756
Net intangible assets 111 2010 2121
Vehicles financing receivables 2935 - 2935
Net current assets -57 -107 536
Cash 638 - 638
Trade investments 233 - 233
Pension assets - 696 696
Other assets 3 297 300
Total assets 6373 5142 12215
Warranty liability and other provisions 489 2667 3156
Pension liability - 19 19
Deferred tax liability 238 - 238
Shareholders equity 2314 2456 2314
Capital assets - - 156
Minority interest 30 - 30
Debt 3302 - 6302
Total liability 6373 5142 12215
Balance sheet
TAMO JLR SPV Cons..
sales 10210 14214 - 24424
Cost synergies - - - -
EBITDA 1196 935 - 2131
EBITDA margin 11.70% 6.60% - 8.70%
Depreciation 218 699 - 917
Interest 140 42 - 182
Other income 105 - - 105
PBT 944 194 - 1138
Interest cost of acquisition - 225 225
Proforma PBT 944 194 -225 913
Impact on PBT -3% - - -
In $ millionP&L A/c
Opportunities:
• Support from Ford in terms of Technology, Engine, IT, Accounting
• Adding up of luxury brands in the product line
• Access to European Market
• Market is volatile and driven by new products
• Strong presence of competitors like Mercedes, BMW, Lexus and Infinity
Threats
Weaknesses:• Jaguar’s declining sales record
• Inexperience of handling such
luxury brands
Strengths:• Tata’s strong
management capability
• Strong monetary base
to investTata’s Jaguar Land Rover Acquisition
o Voluntary retirement to 600 employees.
o Agency staff reduced by 800.
o Offered leaves to 300 workers of Bromwhich and solihull
plant.
o Additional 450 job cuts including 300 managers.
JLR had many new models lined up for next 3 years, so no much work just profits
Strong R & D culture and facilities
Component sourcing, engineering and design benefits
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