BANGKOK, THAILAND: India’s Tata Group, which recently made headlines by introducing the cheapest 100,000-rupee car, is once again in the limelight. This time, for acquiring luxury auto brands, Jaguar and Land Rover, from Ford Motor for US$2.3 billion.

Tata clinched the ownership of prestigious brands beating compatriot Mahindra and Mahindra, another reputed auto company of India.

Tata formally announced the deal on Wednesday after protracted negotiations with Jaguar and Land Rover union workers.

As per the agreement signed by the two parties, US carmaker will contribute $600 million to the Jaguar and Land Rover pension fund.

“We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business,” news agencies quoted group chairman Ratan Tata as saying after making the deal public.

“We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact.”

As part of the transaction, Ford will continue to supply Jaguar and Land Rover for differing period with powertrains, stampings and other vehicle components in addition to a variety of technologies such as environmental and platforms. Ford has also committed to providing engineering support, including research and development plus information technology, accounting and other services.

In addition, Ford Motor Credit Company will provide financing for JLR dealers and customers during a transitional period, which can vary by market, for up to 12 months, agencies said.

Ford Motor CEO and president Alan Mulally said: “Jaguar and Land Rover are terrific brands. We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship.

“Now it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Co that delivers profitable growth for all,” he said.

Meanwhile, news agencies said that the market reacted negatively to the acquisition deal.

Tata Motors shares today fell 4.43% on the Bombay Stock Exchange on Wednesday after formal announcement of the deal. Tata Motors scrip that opened firm at 690 rupees (US$17.19), up 1.47% from its previous close of 679.95 rupees ($16.94), later parted with its initial gains. The company touched an intra-day low of 651.10 ($16.22) rupees, a fall of 4.43% over its last close.

“The cost of borrowing would be expensive and in the short-term, profitability would be affected,” news agencies quoted domestic brokerage firm SMC Global vice-president, Rajesh Jain as saying. (Asia News Network)

With reports from agencies