Ford Motor Co. picked India’s Tata Motors Ltd. as the top bidder for its Jaguar and Land Rover units, the Detroit automaker said Thursday.
Ford has entered into “focused negotiations at a more detailed level” with Tata, the company said in a statement, meaning Tata has become the preferred bidder for the storied British automakers.
“We will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned,” 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, were still in the running.
A person who was briefed on the negotiations said Thursday that Mahindra and One Equity still are under consideration.
“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.
In a statement issued Thursday, Mumbai-based Tata Motors confirmed the negotiations.
“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,” the statement said. “We are pleased by the progress in the discussions to date and very positive about the prospects of this business going forward.”
Last month people close to the negotiations told the AP the potential suitors had submitted bids that ranged from $1.5 billion to $2 billion.
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.
“There are also crucial issues around wages, terms and conditions and pensions to address before any final decision is considered.”
Unions in the United Kingdom are seeking assurances that the sale would not affect employment levels. Combined, Jaguar and Land Rover employ about 15,300 in the U.K.
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 would like to find a buyer that 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 its British customers, they said.
Cash-hungry Ford, which lost $12.6 billion in 2006 but earned $88 million in the first nine months of 2007, has been shopping Jaguar and Land Rover.
Ford 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 have been hit 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, which with Aston Martin and Volvo, made up its Premier Automotive Group.
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.