Merger

with

and

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Presented By: -

• Vishal Gunjalkar • Mangesh Dongade• Chetan Kadam• Pratik Gupta• Rohit Dhoundiyal

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Preface of the Merger

On June 2008, TATA Motors acquired Jaguar & Land Rover(JLR)

Deal was worth US$ 2.3 billion

Acquire global footprint and entry in high-end premium segment of automobile industry

World’s cheapest car as well as luxury brands

Investment was poorly timed and questions were raised on strategies

Demand in the global market for luxury cars collapsed

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TATA Motors

Multinational automotive manufacturing company founded in the year 1945 by visionary businessman Mr. J.R.D Tata

8th largest motor vehicles manufacturing company, 4 th largest truck manufacturer, 2nd largest bus manufacturer by volume

Products: CarsTrucksVansBusesMilitary vehiclesCoaches

1st Indian engineering company in India to be listed in NYSE

As of 2012 – Profit of US$ 2.28 billion and total assets of US$ 28.05 billion

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Jaguar Land Rover

Jaguar cars was founded in the year 1922 by Mr. William Walmsley & Mr. William Lyons as “Swallow Sidecar Company”

Land Rover was founded in the year 1978

Ford Motors acquired Jaguar 1989 for US$ 2.5 billion and Land Rover in 2000 for US$ 2.75 billion

Both the company are manufacturers of luxury cars/premium segment cars & SUV

As of 2013 – Profit of £ 1.215 billion

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British brand under Ford

Ford is a leading automaker & 5th largest automobile company founded in the year 1903

Ford established Premier Automotive Group(PAG) in the year 1999 which consisted of Jaguar, Ashton Martin, Lincoln and later Land Rover

Reasons for selling JLR:

Unprofitable Venture

Unstable market & economic condition

High cost of labour

Other brands sold by Ford:

Ashton Martin

Volvo

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Ford sells JLR

September 2006, Mr. Allan Mulally assumed charge of president & CEO of Ford

Decided to dismantle PAG(Premier Automotive Group)

In June 2007, Ford announced to sell JLR

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The Deal

On 12th June 2007, Ford announced its plan to sell Land Rover & Jaguar

Likely buyers for JLR were:

TATA Motors

Mahindra & Mahindra

Cereberus Capital Management

TPG Capital

TATA wins the bid for acquiring JLR

The price paid by Tata was approximately half of what Ford paid to buy Jaguar and Land Rover

The deal took over a year to agree - which may have helped with the post-merger integration. Tata recognised that it would continue to need support from Ford who is a main supplier of car components to the two brands

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The Deal

No significant change proposed to the businesses by Tata. They claimed that staff, trade unions and the UK government had been kept informed about the proposed takeover and supported the move

The deal has been endorsed by trade unions, which secured a commitment from Tata to continue with JLR’s production plans until the end of 2011. This includes development of new models

TATA charted out plans to raise Rs. 4200 crore via rights issue and around US$ 600 million through Global Depository Receipt (GDR)

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Contd...

Key motives of the merger - TATA Motors

Acquiring JLR would provide significant potential for revenue synergies, including giving Tata greater international distribution, broader product range and better customer service skills

Tata gains access to world-class engineering capability

Strengthens relationship between Tata’s steel and motoring businesses

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Key motives of the merger - JLR

JLR suffering from huge loss

TATA Corus was a leader in automotive grade steel in the European Market

TCS provides services like engineering designs, manufacturing solution and consultancy services to automotive manufacturer like Chrysler, Ford and General Motors

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Challenges in the merger

Complexity in raising fund

Global financial crisis had severely affected the global automobile industry especially in luxury car segment

Increasing material and fuel prices had slowed down demand of vehicles

TATA was planning to invest another US$ 1 billion in JLR. Huge capital incurred on development of Nano and on joint venture with Fiat

Morgan Stanley reported that JLR acquisition will lead to earning volatility of TATA

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What Happened Next?

Successful or Unsuccessful?

Market capitalization

Mcap plunged to Rs. 6500 crore from Rs. 24000 crore

But today Mcap is Rs. 1 lakh crore

Brand Value

Valuation of US$ 7370 million

Top 50 India’s most valuable brand

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What Happened Next?

Profit

Contd....

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What Happened Next?

Sales of Jaguar Land Rover

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Contd....

Conclusion

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