Ford may retain stake after Jaguar sale to Tata

American auto giant Ford is likely to retain a stake and continue supplying engines and some of the components for Jaguar and Land Rover, even after the sale of the two British luxury brands, media reports said in the United Kingdom.

Ford has named India's Tata Motors as its preferred suitor in case of a sale and the two companies have entered into "detailed discussions."

"It is possible, Ford, which is likely to continue to supply engines and components for the cars, may retain a stake in the businesses - similar to the deal it struck with the Gulf-based consortium which bought Aston Martin -- although there is no certainty this will happen," Daily Telegraph reported today, quoting sources close to the development.

The report said that talks could run into February as Tata needs to negotiate a settlement with pension trustees and would seek to convince the unions about the safety of 15,000 British jobs accounted for by Jaguar and Land Rover at plants in Solihull, Castle Bromwich and Halewood.

Tatas would need to convince the workers that these jobs "are not at risk of being moved to India," it noted.

The daily said that Tata's trucks dominate highways in India and the company was making passenger cars since 1991, but acquiring the two marquees would mark its foray into an unchartered luxury territory.

Another report in The Guardian quoted industry sources as saying that being named preferred suitor might not mean Tata has a clear field as yet.

Besides Tatas, another Indian automaker Mahindra and Mahindra and a US-based private equity firm OneEquity, headed by a former Ford CEO Jacques Nasser, have also been pursuing Jaguar and Land Rover.

Ford had previously said it hoped to reach a final decision on Jaguar and Land Rover early in 2008.

The Guardian report added that the discussions would focus on issues wider than the amount Tata offers.

"Ford, which supplies engines to the two brands, is keen to maintain a long-term commercial relationship with any new owner, though it is now thought to have cooled on the idea of retaining a stake in the two brands," it noted.

Other key issues would be the Indian group's investment plans for Jaguar and Land Rover, the daily said.

The officials of 'Unite,' the UK's largest trade union, has said that plant and job security were crucial for its support to a new parent of the two brands.