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March 25, 2008 6:25 pm
A person close to the deal said that Ford had signed an agreement sealing the deal, worth about $2bn, but was withholding making it public until it had briefed the two carmakers’ employees. Ford is expected to make an announcement before markets open in the US on Wednesday.
Contacted by the Financial Times, a Ford spokesman declined to comment, saying: “We will not confirm anything until we have communicated any significant development to our employees.”
The auction, news of which became public last June, has been long-running as Ford and its bankers, Goldman Sachs, Morgan Stanley and HSBC, winnowed down a long list of bidders that formerly included several buyout groups and rival carmaker Mahindra & Mahindra and hammered out commitments on both sides seen as crucial to the two brands’ future.
Ford will pledge a contribution of £300m towards the two brands’ pension funds, decreasing its financial windfall from the sale, which it is undertaking as Chief Executive Alan Mulally moves to focus on the carmaker’s core, lossmaking US volume-car business.
The agreement will also cover the long-term supply of engines to both brands from Ford plants, although details on the terms are likely to be limited because of the carmakers’ reluctance to telegraph future production plans to their competitors.
Tata gained key backing from unions for its bid by expressing support for Jaguar and Land Rover’s current management and the brands’ five-year business plan.
While the combined business is profitable, Jaguar is losing money and its car sales have been declining. Some employees had worried that a buyer might close one of its three plants or two design centres.
Ratan Tata, the group’s chairman, told the Financial Times earlier this month that there were no plans to “Indianise” Jaguar or Land Rover, and said: “We are not looking for a company in which we make a drastic change.”
However, Tata is expected to tap into cut-rate engineering talent in India, as well as its knowledge of the Asian markets, as it develops the brands over the longer term.
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