DETROIT " Ford Motor Co. is selling its storied Jaguar and Land Rover businesses to India's Tata Motors Ltd. in a deal that will net the struggling U.S. automaker about $1.7 billion " roughly a third of the price it paid for the two luxury brands.
The deal announced today will expand the Indian carmaker's reach around the globe.
The agreement had been in the works for months as cash-strapped Ford sought money to fund its turnaround plan.
Tata will pay $2.3 billion for the British brands, but at closing, Ford will pay about $600 million into the Jaguar-Land Rover pension fund, Tata's statement said.
Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But it has been struggling and wants to focus on its main brands.
Tata said it expects no significant changes in the terms of employment for Jaguar and Land Rover's 16,000 workers. It said the transfer of the brands would take place at the end of the second quarter.
"Jaguar and Land Rover are terrific brands," Ford CEO Alan Mulally said in a statement. "We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship.
"Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all."
Tata said in its statement Ford will continue to supply engines, transmissions and other components "for differing periods." Ford also will continue to provide environmental and other technologies as well as engineering support.
Tata Chairman Ratan N. Tata said his company will try to build on the brands' heritage, keeping their identities intact.
Ford shares rose 8 cents to $6.08 in premarket trading Wednesday. Its shares have traded in a 52-week range of $4.95 to $9.70.