Moody’s Investors Service confirms what many observers have thought: India’s Tata, the maker of inexpensive cars, may not a good fit with luxury marques Land Rover and Jaguar being sold by Ford and wanted by Tata.
Moody’s has placed Tata Motors’ current rating on review for a possible downgrade, according to AFX International Focus, a European financial news service. It sees Tata’s swallowing up of Jaguar and Land Rover as creating digestive problems.
"Should (Tata Motors) proceed with the transaction and acquire these two businesses, it will face considerable execution and integration challenges," Moody’s said. The rating service noted that though Tata has a strong position in the low-to-medium segments in India, the acquisition of Jaguar and Land Rover would expose the company to the luxury product segment in wider global markets, which would increase the material risk to the automaker.
No company knows better that risk than Ford, especially with Jaguar.
Ford put Jaguar and Land Rover on the auction block, not only to end the hemorrhaging caused by Jaguar and to generate much-needed cash but also because Ford executives said the U.S. automaker couldn’t afford to fund the brands’ future product requirements.
Ford confirmed last week Tata Motors is its top bidder for Jaguar and Land Rover and will focus negotiations only with Tata. A deal is far from settled.
Source: Jaguar, Land Rover Good Fit for Tata? Moody’s Says Possibly Not
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