MUMBAI: The D-day is inching closer for Tata Motors. According to sources close to the development, India?s largest commercial vehicle company is likely to ink the Jaguar-Land Rover deal with Ford on March 26. Ford is scheduled to make the announcement on engines, pensions and other long-term agreements on that day, the sources said, adding that completion of the agreement, however, is scheduled to take two to three months as it is bound by regulatory approvals.
However, since Jaguar and Land Rover workers are on an extended Easter holiday, the announcement on the agreement would be made only on Wednesday. ?We like our workers to be around when any significant announcements are being made,? said one source close to the deal.
A Tata Motor spokesperson said discussions are still going on and refused to put a date on the announcement. Tata Motors chairman Ratan Tata will lead the Tata delegation and Lewis Booth, executive V-P of Ford, will head the UK team to sign the deal.
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As part of the agreement, Tata Motors has agreed to retain the two UK manufacturing plants and the 16,000 odd employees. Ford has also entered into a long-term agreement, which will go beyond 2011, to supply Jaguar and Land Rover engines to Tata Motors. Ford has also agreed to make significant contributions towards the pension.
Said a Ford source, ?Jaguar and Land Rover pensions are well-funded and were in surplus toward the end of 2007. While market values have declined in the early part of 2008, the Jaguar and Land Rover pension plans are still estimated to be in surplus. Given these facts, we believe there is no cause for concern for Jaguar Land Rover employees or pensioners.?
Currently the pension deficit is around $300 million. There has also been some speculation that Ford would want to retain a minority stake in JLR but now Ford has agreed to commit on long-term supply agreements. While the Tata Motors offer price is still not clear, it has been learnt that the offer would be in the range of $2 billion. Tata is understood to have signed a one-year bridging loan for $3 billion with Citigroup and JP Morgan.
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