Jaguar land rover acquisition by Tata Motors: Five years after

Résumé du document

In June 2008, Tata Motors announced that the acquisition of the iconic British brands (Appendix 1), Jaguar and Land Rover (JLR), was completed. Tata Motors acquired JLR from Ford for USD 2.3 billion. At that time, many analysts were skeptical about the acquisition of luxury European brands by an Indian company specialized in the low-cost cars market. However 5 years later JLR sales had soared to record levels and Tata Motors succeeded to integrate this acquisition and managed to turn it into a bright success.

In 2006, Ford reported a record loss of USD 12.7 billion; it is actually the worst financial result in the history of the group. For analysts the salvage the North American business was only possible by selling JLR. Several private equity firms and automobile manufacturers expressed their interest. Nevertheless Ford was more concerned about the future of JLR employees than the price they would receive for the shares of JLR. This concern was due to the fact that any massive layoffs would adversely affect JRL image in the UK, which was its second largest market. The choice fell on Tata Motors that already showed good track record at integrating acquisitions and managing its employees as well as keeping its promises to them in previous acquisitions.

Extraits

[...] Legal and regulatory issues Post acquisition Did the deal added-value for Tata? Success: why? How much of the success is due to the merger Conclusion Some Challenges ahead Appendix Appendix Company Background of Jaguar and Land Rover Appendix Tata Motors Share Price and Financial Performance Appendix Acquisition Financing Appendix Acquisition Structure Appendix Cost Synergies Appendix JLR Valuation-Discount Cash Flow-End of Appendix JLR Valuation-Wacc Computation and Assumptions Appendix JLR Balance Sheet Appendix 8 : JLR Income Statement Appendix Jaguar Land Rover Sale and Finance performance References Books Papers Websites Jaguar Land Rover Acquisition: 5 Years Later 4 Introduction In June 2008, Tata Motors announced that the acquisition of the iconic British brands (Appendix Jaguar and Land Rover was completed. [...]

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[...] Ford optimized Land Rover and Jaguar's operations by sharing sales and distribution activities and components, originating the JLR who was responsible for assembly and logistical decision-making process Appendix Performance Tata Motors Share Price and Financial TAMO.NS Price Statistics 5 Years - Weekly NYSE TAMO.NS Price Statistics 5 Years - Weekly Source: Reuters In 2008, Tata Motors share was at a low level. This is mainly due to a negative economic environment in the automotive sector. Since then the stock experienced a strong growth. This can be explained by a rising valuation due to an increase in the company size. The constructor is indeed pursuing a growth strategy based on acquisitions in the automotive sector. [...]

[...] The good financial results of JLR positively affected Tata Motors earnings. Tata Motors emerged from the financial crisis with higher Net Income. However it seems that the Indian company still need time to integrate its new acquisition, the net income did not grow at the same pace that the revenues. USD 13 Tata Motors Revenue and Net Income Millions of Indian Rupees Revenue (200 000) Source: Reuters Net Income After Taxes The return on equity (ROE) surged from 2008 to attain a record level of 52%. [...]

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