Ford's Saying Tata to Jag and Rover
By David Lee Smith
March 27, 2008
I'm sorry, Fools, but this is just too easy. At long last, the Jaguar and Land Rover automobile brands will now say "ta-ta" to their parent, Ford (NYSE: F).
By now you've likely heard that the beleaguered automaker will sell both brands to India's Tata Motors (NYSE: TTM). It appears that Tata, which beat out its Indian rival, Mahindra & Mahindra, for the opportunity to acquire the British car companies, will pay Ford about $2.3 billion. Upon closing of the deal, Ford will then contribute $600 million to the two units' pension funds. Tata apparently intends to maintain the units' current management teams.
It appears that the sale won't result in a clean break, at least for a while. For at least three years, Ford will still supply powertrains, stampings, and other parts and technologies for the brands. In addition, the sale agreement calls for Ford to maintain research and development and accounting support for a time. And financing will remain available from Ford Motor Credit for about a year.
Like its Michigan neighbor, General Motors (NYSE: GM), Ford has recorded major losses in the past couple of years; Ford's have topped $15 billion. And like Chrysler, it's watched as Toyota (NYSE: TM) has cruised past it in terms of production.
At the same time, questions persist about the very viability of the grand old company founded by the legendary Henry Ford. So while the sale will permit Ford to run leaner, and to concentrate on its core operations and its own survival, there appears to be little reason for Fools to suddenly become excited about its down-in-the-dumps shares.
For related Foolishness:
What do the unfolding financial crisis and ongoing market volatility mean for your money? The Fool's here with answers. Get the best of our daily commentary and analysis in your inbox simply by entering your email address in the box below.
Terms & Conditions
RSS Headlines
Fool UK