Ford Says 'Tata' to Jaguar, Land Rover

The deal announced Wednesday will expand the Indian carmaker's reach around the globe and give Jaguar and Land Rover badly needed capital to update and expand their product lines.

The agreement had been in the works for months as cash-strapped Ford sought money to fund its turnaround plan.

Tata will pay $2.3 billion for the British brands, but Ford will pay about $600 million into the Jaguar-Land Rover pension fund when the deal closes, Tata's statement said.

Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But the Dearborn-based automaker has been struggling and wants to focus on its main brands.

Selling the companies at such a loss clearly shows buying them was a mistake for Ford, said Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids.

"How can you call it anything else?" he asked. "You have to cut your losses at some point. It's been draining them of cash and resources."

The net proceeds aren't enough to rescue Ford's finances, but the sale will allow the company to focus on its core Ford brands, Merkle said.

Tata should have the cash to rescue the brands and develop new products to better compete with luxury automakers such as BMW AG, Merkle said.

Tata said it expects no significant changes in the terms of employment for Jaguar and Land Rover's 16,000 workers. It said the transfer of the brands would take place at the end of the second quarter.