Ford likely to sell Jaguar, Land Rover next year
Ford Motor Co. is still evaluating bids from three suitors for its Jaguar and Land Rover units, and a sale is not likely until early in 2008, according to sources briefed on the negotiations.
Indian automakers Mahindra & Mahindra Ltd. And Tata Motors Ltd., as well as US private equity firm One Equity Partners LLC are in the running for the units, submitting bids that range from $1.5-$2bn.
As recently as Monday, Ford Chief Executive Alan Mulally reiterated the company’s statement that a sale probably would be announced late this year or in the first quarter of next year, but sources say the price tag is still being negotiated, bidders are awaiting clarity on pending European Union auto emissions regulations, and other issues remain before the sale can go through.
Among the issues is Ford’s parts supplier relationship to the new owners.
Ford supplies engines for Jaguar and Land Rover vehicles and wants that relationship to continue, reportedly.
John Gardiner, spokesman for Ford’s Premier Automotive Group, which includes Jaguar, Land Rover and Volvo, would not comment on the bidding, but said Ford clearly is interested in its parts supply relationship with any potential buyer.
“We recognise the significant connection between Ford and Jaguar-Land Rover in terms of component supply, engineering, manufacturing, and any sale would need to take that into account,” he said.
All three bidders met in November with the British government, unions and Ford about the sale.
Unions in the UK are seeking assurances that the sale would not affect employment levels. Combined, Jaguar and Land Rover employ about 15,300 in the UK.
Jaguar’s main union, Unite, has said in a statement it would prefer Tata if the company is sold.
Cash-hungry Ford, which lost $12.6bn last year but earned $88m in the first nine months of 2007, has been looking to sell Jaguar and Land Rover.
It has mortgaged its assets to borrow money to stay operating and expects to burn up $12bn to $14bn until 2009, when it plans to return to sustained profitability.
Jaguar and Land Rover have been hit by unfavourable exchange rates and high production costs in Britain.
Jacques Nasser, Ford’s chief executive from 1999 to 2001, is involved with the bid from One Equity Partners, an affiliate of JPMorgan Chase & Co.
Ford bought Jaguar for $2.5bn in 1989 and Land Rover for $2.7bn in 2000, joining them with Aston Martin and Volvo to form its Premier Automotive Group. Ford has not said how much it wants for the combined units.
Earlier this year Ford completed the sale of its controlling stake in Aston Martin for $931m in cash and preferred stock.
