Ford Says It Paid 5 Times Fair Value for Jaguar PLC

The price of Ford Motor Co.’s $2.5-billion acquisition of Jaguar PLC was five times the British car maker’s actual net asset value, Ford disclosed in its annual report.

The annual report, which was sent out March 19, said Ford paid $2 billion more than what it said was the fair value of Jaguar’s net assets, which it pegged at $500 million.

At the time of the acquisition last December, some auto analysts said Ford was paying a significant premium for the British company. But Ford defended the purchase by saying it expected to significantly increase Jaguar’s sales.

“There is significant potential for sales increases for Jaguar in Europe, North America, the Far East and other areas,” said Ford Chairman Harold Poling and President Philip Benton in a statement included in the annual report.

At the time of the purchase, Ford also said it was willing to pay for an entry position into the worldwide premium car market, which it expects will grow rapidly in the 1990s.

Some analysts applauded that reasoning, saying it would cost Ford substantially more that $2.5-billion to develop its own premium luxury marque.

In the report, Ford said the $2 billion it paid over Jaguar’s net asset value will be spread over 40 years.