Ford Makes Its Intentions for Jaguar Official
Ford Motor Co. on Tuesday officially expressed interest in acquiring Jaguar, indicating that it is prepared to bid for 100% of the shares of the British auto maker if legal restrictions are lifted.
In a filing with the Securities and Exchange Commission, Ford noted that a Jaguar bylaw prohibits any party from owning more than 15% of the luxury car firm. That restriction, which expires Dec. 31, 1990, was established by Britain’s Conservative government when it privatized the former state-run company in 1984.
The Ford filing noted that the restriction can be removed by a 75% vote of Jaguar shareholders if the British government allows such a change.
“We’re saying that under the right circumstances, we’re prepared to make a bid,” said Linda Cummins, a Ford spokeswoman. “It all depends on the environment at the time and whether it makes good business sense.”
Ford hinted at its interest Sept. 19, when it announced plans for raising its stake in Jaguar from 1% to 15%, the maximum allowable. Ford said it intended to maintain Jaguar as a separate operation if its “involvement in Jaguar were to increase at some time in the future.”
Ford, the world’s second largest auto maker, raised its stake to 11.03% by buying stock on the open market during the past 60 days, according to the SEC filing. Jaguar stock rose 12.5 cents Tuesday, closing at $11.25 in over-the-counter trading of American Depository Receipts.
Jaguar, which has been seeking major new investors, has responded to Ford’s overtures by saying it wants to remain independent. The financially strapped British firm has been holding discussions with General Motors, negotiations aimed at making GM a partner with a minority interest in Jaguar. Jaguar Chairman John Egan said last Wednesday that he hopes to reach a friendly pact with GM, the world’s largest car maker, within a month.
Jaguar executives hope to sell a portion of the company to an auto maker that can provide marketing expertise and financing for the development of new Jaguar products, said Thomas McDonald, a Jaguar spokesman based in Leonia, N.J.
On the other hand, Ford believes that it would bolster its already strong position in European markets by acquiring Jaguar, a prestigious brand name, said Douglas Laughlin, an analyst at the New York-based Bear, Stearns & Co.
“A Jaguar deal would be an image-builder and allow Ford to identify more with the local (British) market and the European market,” Laughlin said. “It would also help Ford in the luxury (market) segment in the U.S.”
However, Ford will not be able to make a bid if Jaguar management continues to reject advances, said Mary Anne Sudol, an analyst at Fitch Investors in New York.
“If Jaguar doesn’t want to be gobbled up by Ford, it’s likely they (Jaguar) can convince the British government to maintain the takeover restrictions,” Sudol said.
