MERGERS AND ACQUISITIONS

- Tata JLR Case Study

 Tata Motors
 Renowned Brand in India
 2nd largest four wheeler manufacturer in India.
 90% of sales is from Indian market
 Recently involved in manufacturing low budget small
car, Nano.
 Made Joint venture with Fiat to manufacture some of
its vehicles in India & Thailand
 Acquired Tetley, South Korea-based Daewoo’s
commercial vehicle unit, and Anglo-Dutch Steel maker
Corus
 Jaguar & Land Rover
 Both are considered as British Icons
 Jaguar – manufacturer of high-end luxury cars
 Land Rover – manufacturer of high-end SUVs
 JLR was a part of Ford’s Premier Automotive Group
(PAG)
 Ford Motors

 Leading automaker & 3rd largest MNC in the

automobile industry
 Ford had bought Jaguar for US$ 2.5 billion in 1989
and Land Rover for US$ 2.7 billion in 2000
 In March 1999, Ford established the PAG with Aston
Martin, Jaguar and Lincoln
 Volvo was acquired for US$ 6.45 billion in 1999
 Ford’s Failure
 Ford failed to derive the desired benefits from its
acquisitions
 Adverse economic conditions worldwide in 1990s
 Decrease in demand for luxury cars, hence sales of
Jaguar in many markets declined
 In Sep 2006, after Allan Mulally charged as President
& CEO of Ford, he dismantled the PAG
 In March 2007, Ford sold Aston Martin sports car unit
for US$ 931 million
 In June 2007, Ford announced to sell JLR
 The Deal

 On March 26, 2008 Tata Motors entered into an

agreement with Ford for the purchase of JLR

 On June 02, 20008 Tata Motors completed the

acquisition of JLR from Ford for US$ 2.3 billion, on a
cash free-debt basis
 The Benefits
 Reduce its dependence on the Indian market

 Helps to spread its business across different

geographies and across different customer segments

 Helps Tata Motors become one of the major players in

the global automobile industry
 Negative Impacts
 Downturn in the global automobile industry
 Difficult economic conditions in the key markets of
JLR including the US & Europe
 Huge capital expenditure
1) as it planned to invest another US$ 1 billion in JLR
2) Invest on the development & launch of Small car
Nano
3) JV with Fiat to manufacture some of its vehicles in
India & Thailand
 The Road Ahead

 Tata motors had formed an integration committee with

senior executives to set milestones and long-term goals
for the acquired entities

 Can overcome slowdown in European & US markets

by concentrating on countries like Russia, China, and
the Middle East