Ford's failed marriage
- 12 Jun 07, 09:02 AM
It is an 18-year marriage that has ended in failure.
Ford bought Jaguar for 拢1.6bn in 1989, in an attempt to build a big business in European luxury cars.
That was followed by the 拢1.7bn purchase of Land Rover in 2000.
But Jaguar in particular has never prospered under Ford's ownership and the world's third largest motor manufacturer last night told MPs that both it and Land Rover are to be sold.
Why?
Well, Ford is in a big mess - it lost more than 拢6bn last year and wants to get back to basics.
And although Land Rover and Jaguar also lost money last year, there is not expected to be a shortage of bidders for the businesses.
Luxury consumer brands are in demand. And the cash to finance a takeover is likely to come from the usual source - private equity firms (and perhaps Middle Eastern or Russia billionaires) whose pockets are bulging with billions of dollars to invest.
That said, Ford will be lucky to get its money back on the sale of these two marques. Apart from the 拢3.3bn it paid for the two businesses, it has ploughed in hundreds of millions of pounds of investment and swallowed substantial trading losses.
In the case of Jag, Ford has turned a sleek cat into a groggy moggy. It's all a bit sad.
UPDATE 1700: Land Rover is a much stronger and more profitable business than Jaguar. According to bankers, Ford will have no trouble selling it.
However Jaguar is an altogether different proposition. There are, I am told by those close to Ford, genuine concerns about whether it has a viable long-term future.
So Ford鈥檚 bankers are not convinced that Jaguar can be sold as a standalone business, which is why it may be wrapped in with Land Rover as a sort-of Buy-One-Get-One-Free.
But if that did happen, Jag employees would have every right to feel anxious: there could probably be no guarantee that a new owner would not shut down most of Jag鈥檚 manufacturing capacity.
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