Ford Motor Co. named Tata Motors Ltd. the top bidder for its Jaguar and Land Rover brands Thursday and entered into "focused negotiations at a more detailed level," meaning Tata was named preferred bidder for the storied British automakers.
"While no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks," Lewis Booth, executive vice president of Ford's European units, said in a statement.
Jaguar and Land Rover employees in the United Kingdom were told about the negotiations Thursday morning shortly before the company made the announcement.
Ford executives have said they expect to sell the two British automakers early this year.
Ford spokesman Jay Ward in London would not say how much Tata bid for the automakers, nor would he say if two other bidders, Indian automaker Mahindra & Mahindra Ltd. and U.S. private equity firm One Equity Partners LLC, still were in the running. Last month people close to the negotiations with Ford told the AP that potential suitors had submitted bids for both companies that ranged from $1.5 billion to $2 billion.
A person briefed on the negotiations said Thursday that Mahindra and One Equity still were under consideration, although Tata is the likely buyer.
"Ford hasn't told them to go away, and that's the end of it," the person told The Associated Press. "Tata's emerged as the preferred partner."
The person requested anonymity because the talks are confidential.
Mumbai-based Tata Motors confirmed the negotiations Thursday.
"We are now entering a period of more focused and detailed negotiations with Ford. We hope both parties can reach an agreement in the forthcoming weeks, though these are complex discussions and there is still much work that needs to be done before that position is reached," a company statement said. "We are pleased by the progress in the discussions to date and very positive about the prospects of this business going forward."
Tata plans to unveil its ultracheap $2,500 car next week at an auto show in New Delhi.
Company Chairman Ratan Tata said in a recent interview that acquiring Jaguar and Land Rover would help bring global visibility to his group - a sprawling conglomerate that makes everything from automobiles to steel and software, and a name that until recently was little-known outside India.
Tata Steel made headlines in January when it acquired Anglo-Dutch steelmaker Corus Group PLC for $12.1 billion by outbidding rivals. The deal, India's biggest foreign acquisition, put Tata at the forefront of India's global reach.
While the Corus acquisition was widely seen as a good match - and appears to be paying off - many fail to see comparable synergies in Tata's attempted takeover of Jaguar and Land Rover.
Tata long has been a giant in truck and bus manufacturing, but it has sold cars for only about a decade. It currently has about a 17 percent share of India's market.
Tony Woodley, general secretary of Unite, Jaguar and Land Rover's main labor union, said much still needs to be negotiated with Tata.
"We need further and more detailed meetings and discussions with Ford and Tata which will focus on the job security of our members in the Jaguar, Land Rover and Ford plants in the U.K.," he said in a statement.
Unite has said it would prefer Tata if the company is sold.
Ford is interested in maintaining its parts supply relationship with the new owners of Jaguar and Land Rover. The company builds engines for Jaguar in Europe.
Industry analysts have said Ford wants to find a buyer who would preserve the Jaguar and Land Rover heritage and jobs in the U.K. Ford, which is the top auto seller in the U.K., doesn't want to rankle British customers, they said.
The U.K. government's Business and Enterprise Department in a statement called the Tata announcement a welcome step toward.
"The government's sole concern is to ensure a successful, sustainable future for Jaguar/Land Rover in the U.K. If Tata is ultimately successful in its bid, the government will work as closely with them as it always has with Ford," the statement said.
Cash-hungry Ford, which lost $12.6 billion in 2006 but earned $88 million in the first nine months of 2007, has been looking to sell Jaguar and Land Rover.
It has mortgaged assets to continue operations and expects to burn up $12 billion to $14 billion until 2009, when it plans to return to sustained profitability.
Jaguar and Land Rover strained by unfavorable exchange rates and high production costs in Britain.
Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000, joining them with Aston Martin and Volvo to form its Premier Automotive Group.
Mark Warnsman, an analyst with Calyon Securities in New York, said Ford will have to sell the brands at a loss primarily because Jaguar has an uncertain future. While Ford has improved Land Rover, Jaguar has continued to struggle, he said.
"Any buyer of Jaguar is going to be taking on the reputational risk of being able to rebuild that brand," Warnsman said. "There's a huge risk of whether that brand can be revitalized and compete successfully with BMW and Mercedes."
Both Land Rover and Jaguar will require significant investment in the next cycle of new products, he said.
Earlier this year Ford completed the sale of its controlling stake in Aston Martin for $931 million in cash and preferred stock.
Ford has said it plans to keep Volvo for now, fixing its cost structure and making it a more premium brand.
Shares of Ford fell 15 cents, or 2.3 percent, to close at $6.45 Thursday.
