Is India engaging in a bit of reverse colonization in the UK? That could be the case if Tata Motors manages to scoop up Jaguar and Land Rover as now expected.
According to The Independent, the company, an arm of Indian mogul Ratan Tata's conglomerate, recently acquired Corus, formerly called British Steel, and has long held Tetley Tea. And now the company is considered the favorite bidder in Ford's sale of the two iconic British brands.
For Ford, the sale is an admission of failure to follow through on former CEO Jacques Nasser's global strategy. It will also represent a massive financial loss. Maybe not as epic or ridiculous as GM's $2 billion payment so it wouldn't have to buy FIAT (in the pantheon of blunders made by the US automakers in the last decade, this might still occupy the top five places by default).
It's expected Ford will face a similar deal with the UAW on healthcare as GM, but unlike the stronger GM, likely won't have as forceful a bargaining position, although with fewer retirees doesn't face the same volume of funding for pensions and healthcare.
Other bidders remain in the race, all private equity firms, including One Equity Partners (ironically led by former CEO Nasser), Ripplewood Holdings and TPG Capital. Cerberus, the firm which recently acquired Chrysler, pulled its bid last week after deciding Chrysler presented quite enough challenge for now.
The big question is parts, components and other bits n' pieces... as in how will they be produced? Both Jag and Land Rover are low volume cars, and the lower the volume, the more expensive the product. Luckily for Tata, a long standing relationship with FIAT could help matters. Dual-purposing parts from FIAT's Maserati could greatly reduce development and production costs for Tata's operation. 24/7 Wallstreet poses yet another interesting, possibly more philosophical question, however. To quote, "...if Tata thinks it can make money on the brands, why can't Ford?"