Tata becomes frontrunner to buy Jag and Rover from Ford (F)

Posted Dec 16th 2007 4:10PM by Douglas McIntyre
Filed under: Forecasts, Deals, Ford Motor (F), China, Russia

Finding a buyer for Jaguar and Land Rover has taken a long time. But, it appears that Indian car company Tata now has the poll position to buy them from Ford Motor Co. (NYSE: F). The price will be about $2 billion. According to The Sunday Times, "sources close to the negotiations say an announcement could come in the next fortnight, bringing to an end a six-month auction."

Even with its need to fund a new health care pool for the UAW, it is not clear that the move is a good idea.

Ford is being hurt by a falling market share in the U.S., and the total car market here is also falling. Higher fuel prices and a damaged housing market are likely to take a further toll on the auto industry in 2008.

In Jaguar and Rover, Ford has two premium, global brands. As a strong middle class emerges in China and Russia, these are the kind of cars that are likely to sell well. Ford only has modest operations in these countries.

Selling the two brands may end up being very short-sighted.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: Ford, inthenews, Jaguar, Land Rover, Tata