Strategic And Economic Rationale For The Acquisition

2687 Words Mar 23rd, 2015 11 Pages
What was the strategic and economic rationale for the acquisition in the case?

Acquisition between Tata- Jaguar Land rover was financially beneficial for the Ford company. During the years 2006-2007 Ford lost more than 10 billions of dollars. Acquiring the Jaguar company in 1990 Ford tried to improve the production. Nevertheless the situation was worth than company expected and required constant investments. In 2008 sales of Jaguar cars decreased from 35000 to 17000. However Land Rover sales were better and at the end of the year they rose from 29000 to 46000 cars in US. Even though the Land Rover evaluation was quite good still financial situation of the company has not improved. Finally the CEO of the company decided to sell Jaguar and Land Rovers brands to change the situation. Ford came to the decision to focus on the production and improvement of their main brands and reinforced their strategy to increase company funds. According to the terms the acquisition of Tata bought Jaguar and Land Rover for 2.3 billion dollars and had to pay the whole amount by cash to Ford. The company also pledged that workers Jaguar and Land Rover were to remain at their posts. Ford also obliged to provide the necessary technical motors and other parts of the car for the production. Tata strategy in the acquisition was directed to start working in new market segment and refine their technology. Their main goal was to reinforce the process and keep on producing luxury cars. Even so…
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