Tata gets Jaguar, Land Rover; announcement today

LUXE GOOD: The deal will also see Ford pay about $598 million into Jaguar and Land Rovers' pension funds.

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London: US automaker Ford has agreed to sell its luxury brands Jaguar and Land Rover to Tata Motors for more than $2 billion, according to a sources. The figure is much less than Ford originally paid for either of the brands.

Ford has been looking to sell Jaguar and Land Rover to strengthen finances after losing $2.7 billion last year and $12.6 billion in 2006.

Ford, which signed the deal on Tuesday, plans to publicly announce the transaction in New York on Wednesday, said another source.

The deal will also see Ford pay about $598 million into Jaguar and Land Rovers' pension funds, according to unions. Ford declined to comment, adding "our first responsibility is to communicate with our employees."

The sale had been expected at the start of this month, but it was delayed as the two firms discussed their future relationship, including technology sharing and Ford's provision of engines and body parts for the two brands.

Tata, India's top vehicle maker, has been in talks with Ford since it was chosen as the frontrunner to buy Jaguar and Land Rover a few days into 2008.

Tata is pursuing the deal to gain a substantial foothold outside India. But analysts have questioned how Tata will incorporate the luxury brands into its stable of sturdy trucks and functional passenger cars, including the Nano, the world's cheapest car which it unveiled in January.

While Land Rover has generated three years of record sales with its iconic SUVs, the fit of Jaguar is far less clear. Ford, which lost $2.7 billion in 2007 and $12.6 billion in 2006, is spinning off Jaguar and Land Rover to focus on turning around its loss-making operations in North America.

The sale will include a commitment by Tata to continue buying engines from Ford, according to unions.

All Jaguar and Land Rover's petrol engines are built in a Ford plant in South Wales, supporting hundreds of jobs there. Diesel engines come from Ford's factory in Dagenham, east London.

One of the sources knocked down reports on Indian television earlier on Tuesday that the deal had been closed for $2.65 billion.

"That figure of $2.65 billion is highly unlikely," one source close to the deal said of the report.

"You have to come south from that by quite a bit." Ahead of the TV report, shares in Tata Motors rose 2.7 percent to a three-week closing high of 679.95 rupees, in a Mumbai market that surged 6.1 percent. Ford shares were down 0.2 percent at around $5.95 at 1813 GMT.