Tata's experience of dealmaking and knowledge of the UK has given it the edge in the race to buy Jaguar and Land Rover, it has been claimed.
The Indian industrial group is competing with JP Morgan-backed One Equity Partners and rival Indian firm Mahindra & Mahindra for the two luxury car brands which have been put up for sale by Ford.
Ford chief executive Alan Mulally has said the American carmaker could announce the sale of Jaguar and Land Rover – which together employ 15,000 in the Midlands – by the end of this year or early next year.
"Tata appears to have the edge because it is larger, because it has demonstrated seriousness of intent, and because there is a level of comfort with the unions," said one investment banker.
Union leaders last month backed Tata Motors' bid on the grounds that the workforce's interests would best be served by a partner "with an established presence and background in manufacturing".
"They already have a presence in the UK through their steel, software and tea companies," the banker said, referring to Tata Steel's Corus, Tata Consultancy Services and Tata Tea's Tetley units. "They understand the UK market, and the UK market understands Tata."
A senior Tata Group official declined to comment on the deal yesterday, but made a general observation that in the current credit situation, Tata may have an edge over private equity firms in competing for assets.
"The impact of the subprime crisis on us will perhaps be less than on other people because we're a strategic industrial buyer with a strong balance sheet," said Alan Rosling, executive director of holding company Tata Sons.
"There may well be some opportunities for us in this," added Mr Rosling, who spearheads the group's international drive.
Ford has been exploring a sale of the two brands, which Merrill Lynch has valued at up to £730 million, since June.
The acquisition could make strategic sense for both Tata Motors and Mahindra, which are keen to raise their global profiles.
Tata Motors, India's top bus and truck maker and third biggest car maker, is next year scheduled to launch a car priced at under £1,200 that may be exported. It also has a venture with Fiat for cars, engines and trucks in India and abroad.
Mahindra, India's top utility vehicle maker, makes the no-frills Logan sedan with Renault and is seeking more overseas markets for its vehicles.
"Indian carmakers are clearly not looking to buy toys," said S. Subramanian, head of investment banking at Enam Securities. "They have the manufacturing capability and they're keen to build their design and technology capability quickly," he said, but declined to comment on which of the two companies would have an edge in the deal.
One analyst who asked not to be named pointed to the Tata Group's recent acquisitions, including Tata Steel's £6.3 billion purchase of Corus after several rounds of frenzied bidding, as evidence of its aggression and perseverance.
"They have shown they have the appetite for big purchases and the ability to digest them," the analyst said.
Concerns remain about funding an acquisition in tight credit markets and diverting resources from their own ambitious expansion plans have affected the two Indian bidders.
Still, both are serious contenders for the Jaguar and Land Rover marques.
"Ford is not exactly selling from a position of strength, and these are profitable, well-regarded companies," said Mohit Arora, managing director for India at J.S. Power Asia-Pacific.