The final cost of the Jaguar-Land Rover deal may go above the $2bn mark, an Indian newspaper reported on Wednesday.
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According to Economic Times of India sources, Tata Motors may end up paying between $US2-2.5bn for the two British brands depending upon the kind of engine supply and sourcing arrangements it can get Ford to commit to and the final bid amount could also include JLR debt.
The sources said the deal would be concluded in the next 10-15 days.
When contacted by the paper, Ford spokesman John Gardiner said: “We cannot say anything more than that the discussions are ongoing and good progress is being made.” On Monday, Tata Motors released a statement saying it hopes the two “parties can reach an agreement in the forthcoming weeks”, the paper noted.
The sources told the Economic Times the price and final bid amount would depend on agreements on engine supply, component sourcing, financing and other support services for which Jaguar and Land Rover would have to continue depending on Ford.
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By GlobalData“The deal will entail signing around 18-20 different agreements including agreements on engine supply, intellectual property rights, the kind of support the new company would get from Ford, financing arrangement for the cars among others,” said a senior consultant source. “The Tatas are in talks with Ford on other factors like the total pension liability. In case the company is able to strike a long term deal for engine supply, the pricing could go up,” he added.
In order to finance the deal, Tata Motors is also likely to look at raising money through the equity route, the paper said.
After top Fiat officials indicated interest in sourcing technology from Jaguar for Alfa Romeo once partner Tata Motors seals the deal, sources close to Ford told the paper the American company is “unlikely to conclude any agreement not in its interest and that would not necessarily include a third party”.
Fiat also said it has “not had discussions … with Tata regarding this potential transaction or its participation in it.” On Monday, Tata Motors issued a statement clarifying that it “has had no discussions with Fiat on deployment of technologies developed by Jaguar and Land Rover”, the Economic Times said.
