Jaguar Accepts $2.5-Billion Takeover Offer From Ford : Jilted GM Says Stock Overvalued
British prestige auto maker Jaguar, whose sleek and sporty sedans convey the rich and the royal, agreed today to a $2.5-billion buyout by Ford Motor Co. in the hope the American giant will steer it back onto the road to success.
The deal, announced in a joint statement, took stock analysts by surprise because Jaguar had previously spurned Ford in favor of advances from General Motors Corp. that would have preserved its independence.
“Ford was prepared to make satisfactory guarantees about how the business will be run in the future,” said Jaguar Chairman Sir John Egan. “Jaguar will be an independent company with a board that has its own funding arrangements.”
GM said in Detroit that it considered Jaguar’s shares to be overvalued and would not make a counter-bid.
GM hinted that Ford was being foolish in paying so much for the relatively small auto producer, but Ford officials said association with Jaguar would have numerous advantages.
“We intend to retain and build on Jaguar’s strength,” Ford of Europe Chairman Lindsey Halstead told a London news conference. “We know Ford would be proud to be associated with Jaguar and its proud traditions.”
The British government paved the way for the takeover Tuesday when it said it would give up its power to veto any hostile bid for the former state-owned company.
The deal with Ford is conditional under terms of Jaguar’s 1984 privatization on agreement of at least 75% of its shareholders.
Jaguar directors said they would recommend acceptance of the offer, which values each share in the company at $13.35. Ford already has a 13.2% stake.
Egan told reporters the offer was “a very attractive one” and said it was “a better way forward for both companies.”
GM said that following a review of Jaguar’s operations, it had concluded that the company’s shares were overvalued and a purchase could not be justified. It took a swipe at Ford, saying it believed Jaguar’s stock was worth substantially less than Ford is offering.
Jaguar, Britain’s last big independent auto maker, became vulnerable to a takeover after pretax profits plunged to $2.2 million in the first half of 1989 from $35.3 million in the same period of 1988.
Its sales stagnated in its prime market, the United States, where it was battered by unfavorable exchange rates.
Jaguar forecast little improvement in its sales for the rest of 1989 and said production was unlikely to exceed 50,000 cars after nearly 52,000 last year.
Auto industry analysts have said Jaguar needs fast cash to tool up for new models to compete with top-range Japanese cars threatening to race ahead in the luxury market.
In return for Ford’s investment, Jaguar offers the U.S. company--founded on making cars for the working man--a line of aristocratic automobiles.
They include the sporty Jaguar XJS, driven by some members of Britain’s Royal Family, and the more stately XJ6 and XJ12 sedans preferred by government ministers and industrialists.
