In March 2008, Ford sells Jaguar and Land Rover (JLR)
to Tata Motor around 10billion pound. And it happened a few months before a
collapse in global demand in the international car market. Furthermore, Tata
Motors financed the takeover with $3billion of a new long-term loan. Then, the
price that paid by Tata Motor was approximately half of the Ford paid to buy
Jaguar and land Rover. Ford had continued to incur heavy losses in Jaguar
Because it hard to turn the business and make it successful.
This deal took over a year to agree by both side and
it may have helped with the post-merger integration. Tata realized that it
would continue to need the support for the Ford. This is because Ford is the
main supplier of car components of these two brands, which are Jaguar and Land
In addition, Tata Motor did not make a lot changes in
the business. They claimed that staff, trade unions and the UK government had
been kept informed about the proposed takeover and supported the move.
Finally, this deal has been endorsed by the trade
unions, which secured a commitment from Tata Motors to continue with JLR’s
production plans until the end of 2011. In the same time, this included the
development of the new models of the products (Riley, 2012).
The motives of mergers and acquisition is acquiring
JLR would provide significant potential for revenue synergies and including
giving Tata Motors a greater international distribution, broader product range
and better customer service skills. This is because JLR is came from luxury
products, the customers are different with the Tata Motors. In addition, JLR is
famous around the world of the brands. They are having different customer
service skills with others brand. So, this is unique way of the JLR.
Next is Tata Motors gains access the world-class
engineering capability. This is because Tata Motors acquired JLR, so they can
access the engineering and involved in the research and development centre. In
the same time, Tata Motors can use of the JLR’s technical to development new
model of the vehicles. This will be a benefit for Tata Motor acquire JLR (Chandran,
Third is strengthens relationship between Tata Motor’
steel and motoring business. JLR is the luxury and famous brand around the
world. So, this can lead Tata Motors to become more successful in the world.
Besides, acquisition would help the company to enter
into the higher premier segment of the global automobile market. As mentioned
by the last point, JLR is a brand and it famous around the world. In this
acquisition will help Tata Motors enter the higher premier market and let more
people know about the Tata Motors.
JLR had two advance design studios and latest
technology as a part of the deal. This would provide Tata Motors access to the
latest technology which will also allow Tata Motor to improve their core
products in India (Laddha, 2016).
For a long term, Tata Motors can get more benefits
from the JLR after acquired JLR. This is the win-win situation for the both side.
There are some examples of motive of mergers and
acquisition. First are the tax benefits. Mergers are also adopted to reduce the
tax liabilities. When merging with a loss-making entity, the company with a
high tax liability cans et off the accumulated loses of the target against its
profits, gaining tax benefits. A good example for the tax benefits is Ashok
Leyland Information Technology (ALIT). ALIT was acquired by the Hinduja
Finance, a group company, so that it could set off the accumulated loses in ALIT’s
books against its profits.
Second is access to funds, this is because often a
company find it difficult to access funds from the capital market. This
deprives the company of funds to reward its grow objectives effectively.
Examples of access to funds is TDPL, TDPL merged with Sun Pharma since TDPL did
not have finds to launch the new products.
Entry into new markets also one of the motive in
merger and acquisition. Mergers are often looked upon as a tool for hassles
entry into new markets. Under normal conditions, a company can enter a new, but
may have to face inflexible competition from the existing market. In the same
time, entry a new market also a big challenge of the company (NGUYEN, et