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TATA MOTORS JAGUAR LAND

ROVER ACQUISITION

Submitted by: G

Debolin Dey

Amit Kumar Da

Shruti

Suvradipta Basu

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Deal Fundamentals & Strategic Intent

Tata MotorsMultinational corporation headquartered

in MumbaiLargest commercial and automobilevehicle manufacturing company in India

Jaguar

Manufactured luxury and executivecars, based out of UKBought by Ford in 1989

Land RoverAll Terrain and Multi-PurpManufacturer, based out oBought by Ford in 2000 fr

DealTimeLine

June 2007

Ford announces plans to selloff JLR

Aug 2007

Tata,M&M and One EquityPartners identified as major

bidders

Jan 2008

Ford announces Tata aspreferred bidders

Mar 2008

Ford agrees to sell JLR to TataMotors

TataMotors

Mission Statement : To be passionate inanticipating the best vehicles and experiencesthat excite our customers globally

Ford reported a loss of $12.7 billion in2006

Ford needed cash to turnaround theautomotive operations in US

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Why Is It Interesting ?Success of the Deal has stunned many analyst , who initially claimed that Tata Motors was making a big mistake . Stock prices of Motors crashed in 2008 after the Deal but revived soon.

Tata did something which very few companies from emerging markets have been able to do : To turnaround & successfully ruwestern company

Respecting each others culture and not letting change of ownership lead to change of culture

ROCE for the Tata Motors and JLR is 79 which is by far the highest among large Indian cross border takeover

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Financing the Deal

At end-FY07, consolidated Debt of Rs 73bn againstvehicle financing receivables of Rs 79bn;Very less leverage allowed it to take debt foracquisitionFinanced the purchase through a $3bn, 15monthbridge loanRefinance the loan through long-term funds

Rs. 1.92 Billion underwriting agreement with J Mfinancial ConsultantsRs.1.75 Billion raised through a deposits schemefrom the PublicAdditional subscriptions by promoter companiessuch as TATA sons, TATA Capital and InvestmentLeveraged by British Government also

Debt Capacity

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Analysis of the Deal

Market Perception - Initial market sentiments regarding the deal were negative Right price of the deal - Questions on whether Tata paid too much Intentions behind the deal - Whether it was just for getting another global brand in their portfolio Financial crisis - Demand for luxury cars tumbled in Europe and North America its two biggest m Leveraged Buyout - Saddled with Rs 21,900 crore debt, uncomfortable for a virtually debt free company Market Capitalization - Plunged to Rs 6,503.2 crore, less than what it had paid Ford for JLR

Right identification of target Recognition of intangible assets like R&D and brand value

Hands off policyLeft day-to-day management in the hands of executives inEngland

Strong financialsTatas financial reserves helped it weather tough times

Primary driver of growth and profit MotorsStrongest product line in recent hisCrossed 1 trillion market capitalizationJan 2013

No. 1 Brand in India surpassing Reli

What went right?

What went wrong?

Success Story

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Reference

Business Today . (n.d.). Retrieved from http://businesstoday.intoday.in/story/mergers-and-acquisitions-throw-up-attractive-investment-options/1/14940.htmll

Case in Point: Tata Motors acquisition of Jaguar Land Rover revs up a company - Washington Post . (n.d.)Retrieved from http://articles.washingtonpost.com/2012-05-29/news/35455235_1_jaguar-land-rover-tata-motors-cheapest-car

M&As throw up investment options, dangers remain - Business Today - Business News . (n.d.). Retrieved frhttp://businesstoday.intoday.in/story/mergers-and-acquisitions-throw-up-attractive-investment-options/1/14940.html

Tata Motors Finds Success in Jaguar Land Rover - NYTimes.com . (n.d.). Retrieved fromhttp://www.nytimes.com/2012/08/31/business/global/tata-motors-finds-success-in-jaguar-land-rover.html?_r=1&adxnnl=1&pagewanted=2&adxnnlx=1384175093-8H+xX36ogDMbrP/KFdx/YA

TATA acquire Jaguar Land Rover: Cultural Success | resources . (n.d.). Retrieved fromhttp://www.kwintessential.co.uk/resources/tata-jaguar-land-rover.html

Bloomberg

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