TATA MOTORS JAGUAR LAND

ROVER ACQUISITION

Submitted by: Group 0

Debolin Dey

16/015

Amit Kumar Das

16/305

Shruti

16/345

Suvradipta Basu

16/352

Deal Fundamentals & Strategic Intent

Deal
TimeLine

Tata
Motors

June 2007
Ford announces plans to sell
off JLR

Aug 2007
Tata,M&M and One Equity
Partners identified as major
bidders

Mission Statement : To be passionate in

anticipating the best vehicles and experiences
that excite our customers globally

Land Rover
All Terrain and Multi-Purpose Vehicle
Manufacturer, based out of UK
Bought by Ford in 2000 from BMW

Jan 2008

Mar 2008

Ford announces Tata as

preferred bidders

Ford agrees to sell JLR to Tata

Motors

June 2008
Deal is completed

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Multinational corporation headquartered

in Mumbai
Largest commercial and automobile
vehicle manufacturing company in India

Jaguar
Manufactured luxury and executive
cars, based out of UK
Bought by Ford in 1989

M&A and Corporate Restructuring

Tata Motors

Ford reported a loss of $12.7 billion in

2006
Ford needed cash to turnaround the
automotive operations in US

Ford

Why Is It Interesting ?
Success of the Deal has stunned many analyst , who initially claimed that Tata Motors was making a big mistake . Stock prices of Tata
Motors crashed in 2008 after the Deal but revived soon.

ROCE for the Tata Motors and JLR is 79 which is by far the highest among large Indian cross border takeover

M&A and Corporate Restructuring

Respecting each others culture and not letting change of ownership lead to change of culture

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Tata did something which very few companies from emerging markets have been able to do : To turnaround & successfully run a
western company

Financing the Deal

Rs. 1.92 Billion underwriting agreement with J M

financial Consultants
Rs.1.75 Billion raised through a deposits scheme
from the Public
Additional subscriptions by promoter companies
such as TATA sons, TATA Capital and Investment
Leveraged by British Government also

M&A and Corporate Restructuring

At end-FY07, consolidated Debt of Rs 73bn against

vehicle financing receivables of Rs 79bn;
Very less leverage allowed it to take debt for
acquisition
Financed the purchase through a $3bn, 15month
bridge loan
Refinance the loan through long-term funds

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Debt Capacity

1.
2.
3.
4.

Synergies for JLR through TATA MOTORS LIMITED

Economies Of
Access to a wider pool of financing
Scale
Material costs for JLR will come down due to EOS
Access to long established operational and sales expertise of Tata Motors in India for JLR
Since April 2011, Freelander vehicle kits have been assembled by TML in a complete
knock down facility in India

Synergies for TATA Motors through JLR

1. Globally recognised premium brands helps TATA and thus maximises its volume
2. Helps TATA to gain technical excellence and cut costs

M&A and Corporate Restructuring

Deal Valuation
1. 2-3xCY2007 EV/EBITDA, 0.94x P/B & 0.2xCY2007 EV/Sales
2. Trading at 10xFY09E P/E; close to lower end of its trading band

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Valuation & Synergies

Analysis of the Deal

Market Perception - Initial market sentiments regarding the deal were negative
Right price of the deal - Questions on whether Tata paid too much
Intentions behind the deal - Whether it was just for getting another global brand in their portfolio
Financial crisis - Demand for luxury cars tumbled in Europe and North America its two biggest markets
Leveraged Buyout - Saddled with Rs 21,900 crore debt, uncomfortable for a virtually debt free company
Market Capitalization - Plunged to Rs 6,503.2 crore, less than what it had paid Ford for JLR

What went right?

Success Story

Right identification of target

Primary driver of growth and profit for Tata

Motors
Strongest product line in recent history
Crossed 1 trillion market capitalization in
Jan 2013
No. 1 Brand in India surpassing Reliance

Recognition of intangible assets like R&D and brand value

Hands off policy

Left day-to-day management in the hands of executives in
England

Strong financials
Tatas financial reserves helped it weather tough times

M&A and Corporate Restructuring

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What went wrong?

M&A and Corporate Restructuring

Business Today. (n.d.). Retrieved from http://businesstoday.intoday.in/story/mergers-and-acquisitions-throw-upattractive-investment-options/1/14940.htmll

Case in Point: Tata Motors acquisition of Jaguar Land Rover revs up a company - Washington Post. (n.d.).
Retrieved from http://articles.washingtonpost.com/2012-05-29/news/35455235_1_jaguar-land-rover-tatamotors-cheapest-car
M&As throw up investment options, dangers remain - Business Today - Business News. (n.d.). Retrieved from
http://businesstoday.intoday.in/story/mergers-and-acquisitions-throw-up-attractive-investmentoptions/1/14940.html
Tata Motors Finds Success in Jaguar Land Rover - NYTimes.com. (n.d.). Retrieved from
http://www.nytimes.com/2012/08/31/business/global/tata-motors-finds-success-in-jaguar-landrover.html?_r=1&adxnnl=1&pagewanted=2&adxnnlx=1384175093-8H+xX36ogDMbrP/KFdx/YA
TATA acquire Jaguar Land Rover: Cultural Success | resources. (n.d.). Retrieved from
http://www.kwintessential.co.uk/resources/tata-jaguar-land-rover.html
Bloomberg

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Reference

M&A and Corporate Restructuring

THANK YOU!!!
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1/7/2015