Indian conglomerate Tata is expected to complete the £1.15 billion takeover of Land Rover and Jaguar next week.
Tata executives including Ravi Kant, managing director of Tata Motors, are set to travel to the Midlands for a joint signing ceremony with bosses of Ford, current owner of JLR.
An informed source last night told The Birmingham Post: “The signing is imminent.” Confirmation also came when Tata Motors issued its full year results and management said they expected to complete the formal handover sometime in June.
It coincided with reports that Ford is planning to cut its US workforce by 12 per cent in the face of huge losses and record oil prices.
The timetable for Tata’s finalisation of the takeover has come as no surprise. When the acquisition was formally announced in April, Tata had said its intention then was to complete the deal before the end of the second quarter.
But it is likely to be a low key affair, with none of the razzamatazz normally associated with such massive deals. There has been speculation that Tata, India’s largest vehicle maker, could be worried at what response it might get to a high profile ceremony, lauding the takeover of an iconic British asset by a foreign group, at a time of global credit crunch and economic slowdown.
However, it is in keeping with Tata’s approach to such acquisitions. When it took over Corus – formerly British Steel – last year there was very little fanfare.
Tata is yet to spell out in any detail its plans for JLR although it has guaranteed the immediate future of the companies and promised to back both management and the planned schedule of new models.
It has also said the jobs of the thousands of people directly employed at the two companies will be safe, although those indirectly involved in the manufacture of the vehicles - the component suppliers - are still waiting to find out how they stand with their new customers.
Quietly, most think it will be business as usual but they are being as accommodating as possible with the Indian company to show they can offer it good value.
Meanwhile, Tata reported a slightly lower full-year net profit and said it expected its domestic market to be challenging, largely due to an unprecedented increase in input costs amid difficult global economic conditions.
Despite this, the autumn launch of its Nano People’s Car - the world’s cheapest mass produced automobile - should maintain the company’s healthy position.
It also announced it would raise about £850 million via three simultaneous but unlinked rights issues to finance the JLR acquisition.
Besides the rights issues, the company will also raise about £250 million through an appropriate issue of securities in foreign markets on terms that are as yet undecided.
Ravi Kant also said the company planned to invest an additional £1.18 billion over the next four to five years in order to expand its existing facilities, invest in product development and to set up new facilities. He added that the company aimed to launch about 100 new products within this timeframe.
Whether this means new JLR models remains to be seen. However, there is speculation that the company will put the Land Rover LRX concept vehicle - displayed to much acclaim at the Geneva Motor Show earlier this year - into full production, while a new Jaguar sports car could also be on the cards.
For the year to the end of March, Tata Motors’ net profit declined marginally to £250 million from a year earlier, while total revenues increased 9.3 per cent to £4.75 billion.
Meanwhile, JLR’s existing owner, Ford, could be heading for trouble in its US heartland. Press reports have suggested the Blue Oval may cut its domestic workforce by more than 2,000 jobs. Ford announced last week it would cut production and no longer expects to return to profitability by 2009.
Additionally, MG parent Shanghai Automotive (SAIC) said it planned to issue up to £618 million of three-year corporate bills to fund expansion and repay loans taken out by subsidiaries, which includes Longbridge owner Nanjing.
The company will make an initial issue of about £300 million of bills, but has not elaborated on this. A shareholders’ meeting has been called for June 17 to approve the plan.