Ford will ‘proceed with further substantive discussions with Tata Motors over the forthcoming weeks’, according to Ford Europe executive vice president Lewis Booth – although he stressed that there was still some way to go and that ‘no final decision has been made’.
For its own part, Tata said it had held ‘positive discussions’ with Ford, and was now entering ‘a period of more focused and detailed negotiations’ – which presumably means they’ll all be sitting round a boardroom table somewhere hammering out the small print with the lawyers.
Tata’s emergence in pole position – ahead of buyout group One Equity Partners and and its Indian rival Mahindra & Mahindra – has been widely tipped for a while now. The group, which is best known for its cheap and cheerful cars, wants to expand its international reach and gain access to the higher end of the market. And getting its hands on two venerable brands like Jaguar and Land Rover will represent a pretty big coup for a company that didn’t even exist a decade ago.
But although Tata may be a new kid on the block, it’s already proved its mettle – last year its steel arm bought Anglo-Dutch group Corus for $12.9bn, becoming one of the ten biggest steel producers in the world. And it’s already pulled a masterstroke in the battle for Jaguar and Land Rover by enlisting the support of Unite, the Ford workers’ union.
Presumably the union response would have been very different if a private equity firm had emerged as the leading bidder, as seemed inevitable when Ford decided to put the two marques up for sale last June. Back then these cash-rich firms were dominating the M&A world; now the credit squeeze has forced the banks to pull in their horns, and buyout houses are finding it hard to raise the necessary debt. So they were always going to be playing catch-up to trade buyers like Tata.
The romantics might have been hoping to see these two great British institutions return to British hands – but for the financial stability of the marques and the job security of their workers, a sale to Tata looks like a pretty good outcome. And it might even make a very slight dent in Ford’s massive losses...