Assignment: 1

 List of important merger & acquisition done in last three years between by
international companies in India:-
 2008:-
I. Tata motors & jaguar
 2009:-
i. Tech Mahindra & Satyam
ii. Oracle corporation & Sun micro system
iii. Essar group & UCMC group
iv. Telenor Asia pte ltd & Unitech wireless ltd.
v. Indian hotel co. ltd & Sea rock hotel, Elel hotels & Investment Ltd
vi. Union bank ,BOI & MCX stock exchange
vii. Suzlon & RE power
viii. Hindalco & Coal mine Queensland
ix. Apollo tyers & Michelin
x. Tata tea ltd & Mount Everest mineral water ltd
 2010:-
1. Bharti Airtel & Zain telecom
2. Reliance industries & Infotel
3. Reckitt Benckiser & Paras Pharma
4. Vedanta & Cairn
  From the above given list I will like to give my comments on the
acquisition of Tata Motors & Jaguar & land rover(JLR) :-

 About Tata Motors:-

Tata Motors is India's largest automobile company, with revenues of US$ 8.8 billion in
2007-08. With over 4 million Tata vehicles plying in India, it is the leader in commercial
vehicles and among the top three in passenger vehicles. It is also the world's fourth
largest truck manufacturer and the second largest bus manufacturer. Tata cars, buses and
trucks are being marketed in several countries in Europe, Africa, the Middle East, South
Asia, South East Asia and South America. Through subsidiaries and associate companies,
Tata Motors has operations in South Korea, Thailand and Spain. It also has a strategic
alliance with Fiat.

 About JLR:-

Jaguar Land Rover is a business built around two great British car brands with exceptional
design and engineering capabilities. Jaguar Land Rover’s manufacturing facilities are in the UK.
Jaguar Cars, founded in 1922, is one of the world’s premier manufacturers of luxury saloons and
sports cars. Land Rover has been manufacturing 4x4s since 1948. Its products have defined the
segments in which they operate.

Jaguar Land Rover’s manufacturing facilities are in the UK. The Jaguar Land Rover business
employs over 16,000 people, predominantly in the UK, including some 3,500 engineers at two
product development centers, in Whitley in Coventry and Gaydon in Warwickshire.

The Jaguar XF, XJ and XK models are manufactured at the company's Castle Bromwich plant in
Birmingham, UK, while the Jaguar X-TYPE is produced alongside the Land Rover Freelander 2
at the Halewood plant in Liverpool, UK. Land Rover's Defender, Discovery 3, Range Rover
Sport and Range Rover models are all built at Solihull, UK.

The business is a major wealth generator for the UK, with 78 per cent of Land Rovers exported
to 169 countries and 70 per cent of Jaguars exported to 63 countries. Sales to customers are
conducted principally through franchised dealers and importers.

 Facts of deal:-

 Tata Motors today acquired the Jaguar Land Rover businesses from Ford Motor
Company for a net consideration of US $2.3 billion, as announced on March 26 2008,
in an all-cash transaction. Ford has contributed about US $600 million to the Jaguar
Land Rover pension plans.

 Jaguar Land Rover has been acquired at a cost of US$ 2.3 billion on a cash free, debt-
free basis. 

 The purchase consideration includes the ownership by Jaguar and Land Rover or
perpetual royalty-free licenses of all necessary Intellectual Property Rights,
manufacturing plants, two advanced design centers in the UK, and worldwide network
of National Sales Companies.

 Long term agreements have been entered into for supply of engines, stampings and
other components to Jaguar Land Rover.

 Other areas of transition support from Ford include IT, accounting and access to test
facilities.

 The two companies will continue to cooperate in areas such as design and
development through sharing of platforms and joint development of hybrid
technologies and power train engineering.

  The Ford Motor Credit Company will continue to provide financing for Jaguar Land
Rover dealers and customers for a transition period.

 My views on this acquisition:-

  Benefits to Tata Motors from acquisition of JLR :-

a.  The acquisition would help the company acquire a global footprint and
enter the high-end premier segment of the global automobile market.

b. After the acquisition, Tata Motors would own the world's cheapest car -
the US$ 2,500 Nano, and luxury marquees like the Jaguar and Land
Rover.

c. Tata Motors was interested in acquiring JLR as it would reduce the

company’s dependence on the Indian market, which accounted for 90% of
its sales. The company was of the view that the acquisition would provide
it with the opportunity to spread its business across different geographies
and across different customer segments.

 Areas in which Tata Motors will face a problem ( A road ahead) :-

 Will the Indian luxury car customer be swayed away from the German trio
comprising Mercedes-Benz, BMW and Audi and go out and buy himself a
Jaguar?

 To keep up with this tough competition, Tata’s effort in the first phase should be
to establish the brand appropriately rather than focus on pushing volumes.

 The bigger challenge for Jaguar is to sustain its premium pricing and convince
customers it’s a cut above the Teutons.

 One of the major problems for Tata Motors could be the slowing down of the
European and US automobile markets. It was expected that the company would
address this issue by concentrating on countries like Russia, China, India, and the
Middle East.
  It had increased the earnings volatility, given the difficult economic conditions in
the key markets of JLR including the US and Europe.

 Tata Motors had to incur a huge capital expenditure as it planned to invest another
US$ 1 billion in JLR. This was in addition to the US$ 2.3 billion it had spent on
the acquisition. Tata Motors had also incurred huge capital expenditure on the
development and launch of the small car Nano and on a joint venture with Fiat to
manufacture some of the company’s vehicles in India and Thailand. This, coupled
with the downturn in the global automobile industry, was expected to impact the
profitability of the company in the near future.