Tata buys Jaguar for £1.15bn

India's Tata Motors will buy luxury brands Jaguar and Land Rover from Ford Motor Co for about £1.15 billion sterling ($2.3 billion) in cash, the companies said this morning.

The transfer of ownership to Tata Motors is expected to close by the end of the next quarter, subject to regulatory approvals, they said.

"We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact," Tata Motors chairman Ratan Tata said in a statement.

Ford would contribute up to about $600 million to Jaguar/Land Rover pension plans, Tata Motors said.

Tata Motors, India's top bus and truck maker and its third-largest car maker, has been in talks with Ford since it was chosen as the front-runner to buy British-based Jaguar and Land Rover a few days into 2008.

Ford, which lost $2.7 billion in 2007 and $12.6 billion in 2006, is selling Jaguar and Land Rover to focus on turning around its loss-making operations in North America.

"Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company," Alan Mulally, Ford chief executive, said in the statement.

Shares in Tata Motors closed down 0.1 per cent at 679.40 rupees in a Mumbai market that fell 0.8 per cent.

Analysts have expressed concerns about how Tata Motors would fund the deal, and how the global, marquee brands would fit into its stable of trucks, buses and passenger cars, including the $2,500 Nano, the world's cheapest car which it plans to begin selling later this year.

Tata Motors has announced plans to raise $4 billion of funding, which is expected to help finance the Ford deal and the manufacture of the Nano, which it unveiled in January.

The deal comes at a time when the credit-market crisis has raised borrowing costs and deterred deal-making across the globe.