Article & Journal Resources

By STEPHEN POWER
December 17, 2007; Page A15

Ford Motor Co. is nearing a decision on the fate of its Jaguar and Land Rover brands, and a unit of Indian conglomerate Tata Group is seen as having an edge over others, people familiar with the process said.

The Dearborn, Mich., auto maker could name a preferred bidder as early as this week, people familiar with the matter said. A Ford spokesman in London said yesterday discussions are continuing between Ford and would-be buyers of Jaguar and Land Rover and "no final decision has been made" on the brands.

Tata Motors Ltd., the Tata Group unit, received an endorsement last month from the United Kingdom trade union that represents workers at Jaguar and Land Rover. A deal would give Tata Motors, a maker of small, inexpensive cars mainly for the Indian market, international presence. It would add another dimension to Tata Group, with interests ranging from steel to software. Its 96 companies employ about 200,000 people and have annual sales of more than $20 billion.

A person familiar with the matter said discussions between Ford and would-be buyers have lately centered on the potential financial impact on Jaguar and Land Rover of new carbon-dioxide regulations in Europe, and how big a stake Ford might be willing to retain in the brands. The U.K. government has warned Jaguar and Land Rover could be forced out of business, depending on how new carbon-dioxide regulations in Europe are written.

A group of Jaguar dealers in the U.S. have raised concerns with Ford about the luxury brand falling into the hands of an auto maker known for low-priced cars. Less concern has arisen in Britain itself. In the past 10 years, several quintessential British auto brands have been acquired by foreigners. Rolls Royce and Mini are now part of BMW AG; Bentley is owned by Volkswagen AG.

Leaders of Britain's auto workers union have said Tata "best fit" its criteria for a new owner of the brands: that the buyer have "an established presence and background in manufacturing." Although not binding on Ford, the union's views carry political weight in England.

Tata is vying against One Equity Partners, a unit of J.P. Morgan Chase & Co., and Indian auto maker Mahindra & Mahindra Ltd., which is bidding jointly with private-equity firm Apollo Management LP.

Ford has said it expects to reach an agreement on selling Jaguar and Land Rover early next year.

It isn't clear how much Tata or the other bidders would be willing to pay for the brands. Merrill Lynch & Co. estimated this year the combined sale of the Jaguar and Land Rover brands would raise $1.3 billion to $1.5 billion. Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000. The company has put them up for sale as it seeks to refocus on its Ford brand and its North American business. Ford posted losses of $12.6 billion last year.

Ford decided to put the luxury brands up for sale this year as part of new Chief Executive Alan Mulally's strategy to refocus the auto maker on its core brands. Jaguar has especially struggled, with U.S. sales down 26% through November.

Ford faces a steep market downturn next year in which industry-wide auto sales are forecasted to drop below 16 million cars and trucks for the first time in a decade. Ford also will likely have to spend billions, along with its competitors, to recalibrate its product mix to meet new stringent fuel-economy regulations.

--Mike Spector contributed to this article.

Write to Stephen Power at stephen.power@wsj.com