The luxury brand Jaguar is poised to join Tata Motors, an Indian auto company that makes tractor-trailers, full-size sport utility vehicles and the world's cheapest car.
Tata is the front-runner in the bidding for Ford Motor's Jaguar and Land Rover brands, people close to the negotiations say, and a decision could be made in the next few days. A final deal, which is expected to be worth about $2 billion, will not be announced until early next year, according to the people, who were not authorized to comment publicly.
U.S. dealers concerned
Jaguar dealers in the United States have expressed concern about an Indian buyer, which they believe would devalue the luxury brand name. Tata Motors, coincidentally, is preparing to introduce its People's Car, which will cost about $2,500 - about one-twentieth the price of the least expensive Jaguar.
The combination of luxurious, specialized products and cheap, commodified ones may seem like an unlikely business model, but the Tata Group, the family-run conglomerate that owns a third of Tata Motors, is full of similar contradictions.
The group's Taj Hotels command some of the highest rates in the world - one night in a luxury suite in the Taj Mahal Palace in Mumbai, India, costs 110,000 rupees ($2,795) in high season. But the group also is building a chain of no-frills hotels around India, with rates as low as 1,499 rupees ($37.95) a night for a double room in some cities.
Tata owns a chain of high-end jewelry stores, Tanishq, and makes fertilizer though its Tata Chemicals unit. The company has a charter airplane business, serving clientele such as chief executives and Bollywood stars, and owns Tata Sky, which beams business news and hit films into 1 million Indian households.
Analysts and economists in India say that the parent company may look like a ball of contradictions from the outside, but it is held together by some common management mandates.
As in many family-run conglomerates, there is a "strong emphasis on the long-term perspective," said Subir Gokarn, Standard & Poor's chief economist in Asia. Tata focuses on building institutions, on social responsibility and ethics, and on fair dealing with government, he said.
But it is also highly profitable. After-tax profits at Tata Motors, which is publicly traded, increased 21 percent in the first half of this fiscal year, to 9.94 billion rupees ($253 million).
Charities are among the shareholders that receive those profits. Tata Sons, the holding company that manages the Tata Group, is two-thirds owned by charitable trusts.
Tata Motors has been the front-runner in a three-way contest for Jaguar and Land Rover since trade unions backed Tata's bid in November.
The Indian automobile company Mahindra & Mahindra is also vying, as is the private equity group One Equity Partners, an affiliate of JPMorgan Chase.
While Tata is not commenting on the deal, Ratan N. Tata, the head of the conglomerate, has talked recently about how he thinks acquisitions should be handled in general. "Our mandate is we don't want to change the look and feel of a company," Tata said in October in his Mumbai headquarters. That means keeping the management intact, he said.
When Tata is done buying a company, he said, it should look the same as before, "except now it's owned by someone in India."