NEW YORK TIMES
By STEVEN PROKESCH, Special to The New York Times
Firing the first shot in what analysts expect to erupt into a bidding war for Jaguar P.L.C., the Ford Motor Company announced today that it had begun buying shares of the troubled British manufacturer of luxury cars.
The announcement came less than a week after Jaguar reported that because of problems in its crucial American market, it had barely broken even in the first half of this year. At the time, Sir John Egan, Jaguar’s chairman, said he doubted whether tiny Jaguar could continue to operate alone without an improvement in market conditions. He noted that several competitors had made proposals to Jaguar.
But the Ford move was unsolicited, and it was unclear how Jaguar, which had no immediate comment, would respond. At a news conference, L. Lindsey Halstead, chairman of Ford of Europe, said he had informed Sir John today that Ford was interested in buying up to 15 percent of Jaguar’s shares initially – the maximum the Government will permit until the end of the year. He termed the conversation ”very friendly” and said ”I would hope to have more” talks. Weak Dollar Hurts Sales
The British Government sold Jaguar to the private sector in 1984, and the company, which had been losing money, made a dramatic turnabout, regaining its reputation for quality. But it has suffered in the last two years because the weak dollar has cost it sales in America, a vital market for Jaguar.
Mr. Halstead indicated that Ford would ultimately like to acquire a controlling stake in Jaguar to help bolster its sales in the luxury car market. ”We’d like to participate more significantly in that segment,” he said. Although Ford owns Aston Martin, this British manufacturer of high-performance sports cars is much smaller than Jaguar, which sold about 52,000 cars last year.
Ford’s most expensive mass-produced car in Europe is the Scorpio, which is made by its Merkur division in Germany and sells under the Grenada name in Britain for about $38,000, said Philip Ayton, an analyst at Barclays de Zoete Wedd in London. The most popular Jaguar model in Europe, he said, is the 3.6-liter Sovereign, which sells for $47,000 or so. A $57,000 Convertible
The Sovereign is sold as the XJ6 in the United States, where two versions now retail for $43,000 and $48,000. Jaguar has just introduced another version that will retail for $39,700. Its highest-priced model in America, the XJS convertible, sells for $57,000.
Ford is also negotiating with loss-plagued Saab-Scania of Sweden about establishing a link. Saab, one of the smaller European car makers, might help Ford increase its presence in the market for cars favored by relatively affluent younger car buyers.
Ford is the fourth-largest auto maker in Europe, with about 12 percent of that market. Jaguar is the 11th-largest European car maker, after Saab.
In trading today on the London Stock Exchange, Jaguar’s shares rose 60 pence, or 94 cents, to about 466 pence, or about $7.32. At that price, a 15 percent stake in Jaguar would cost about $200 million. Later on Nasdaq, where Jaguar A.D.R.’s are traded, the issue closed up 1 11/32, at 7 26/32.
Industry executives say that the General Motors Corporation has also expressed a strong interest in Jaguar. Industry analysts said other potential suitors include Chrysler, Volkswagen of West Germany, Volvo of Sweden and the major Japanese auto makers. ‘A Prime Attraction’
”A number of companies are interested in having a greater exposure to the luxury car market in Europe and the U.S., and obviously the Jaguar name would be a prime attraction,” said Harvey Heinbach, an analyst at Merrill Lynch in New York. For Ford, he added, ”the Jaguar distribution system in the United States could be used as a base to sell other products; I’m thinking specifically of the Merkur line, which has not done very well at Lincoln-Mercury.”
In what appeared to be tacit acknowledgment of the Government’s perhaps decisive role in the event of a bidding war, Mr. Halstead emphasized Ford’s commitment to Britain, where it is the market leader, a major employer and the only big car manufacturer with research operations. British newspapers have reported that Jaguar would rather have a link with G.M.
While Jaguar has been hurt by a strike this year, its main problems have been in the United States, which accounts for more than 40 percent of its sales. It has scaled back the number of cars it had planned to sell in America this year to 20,000 from 23,000.
The DAILY EXPRESS quotes Sir John Egan as saying;
“Our desire has always been to maintain the independence of the company”.
Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...
Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
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