MERGERS AND ACQUISITIONS: STUDY ON

JAGUAR-LAND ROVER AND HERO-HONDA

CASES
BY STUDENTS OF NMIMS UNIVERSITY 4TH YEAR:
Nuruddin Mithiborwala[L009], Kush Paithane[L014], Rahul Sen Sharma[L017], Soham
Misra[L022], Mrinal Goyal[L029], Medha Pandita[I224]

INTRODUCTION
Management of businesses in this hard period is frequently based on the effectiveness of
corporate action implementation. Management has always been concerned with generating
adequate earnings from company activities for its shareholders. Because the company is so
dynamic, no one can claim with certainty that the firm's policy will be effective in every case;
so many changes are occurring at such a rapid pace that they can either harm or benefit the
firm. The management must develop and apply the most appropriate policy based on the
organization's scenarios. Companies use mergers and acquisitions (M&A) for a variety of
strategic reasons. Mergers and acquisitions (M&A) refer to the consolidation of companies or
their major business assets through financial transactions. ‘Merger’ occurs when two firms of
comparable size merge to establish a new, larger organization. The ownership and control of
both enterprises are combined in the new company and ‘Acquisition’ occurs when a larger firm
buys out a smaller company and positions itself as the new owner. The smaller corporation
ceases to exist as a separate entity. M&A activity can be driven by various factors, such as:
‘Growth,’ in order to expand market share, product offerings or improve customer base
companies may merge or acquire, second is for ‘Efficiency,’ M&A can led to economies of
scale and operational efficiencies, third is ‘Technology and Innovation’, when a company lacks
expertise on valuable technology M&A can give them a competitive edge, and lastly
‘Diversification’ M&A helps companies to spread among different industrial verticals.
To understand a bit more over this subject we have studied two cases on M&A, Case I on
JAGUAR-Land Rover and Case II on Hero-Honda.
 CASE I: JAGUAR-LAND ROVER

JAGUAR
Prior to Tata Motors acquiring Jaguar and Land Rover in 2008, Jaguar had a somewhat different
story:
 Ownership: Jaguar was previously owned by Ford Motor Company as part of their Premier
Automotive Group. Ford had acquired Jaguar in 1989 from BL (British Leyland), a troubled
British car conglomerate.
 Challenges: By the time Tata Motors came along, Jaguar was facing some difficulties.
Their retro-styled designs were becoming outdated, and they struggled to compete with
new, fuel-efficient engines being offered by other manufacturers. Ford had attempted a
turnaround but had not been entirely successful.
 Brand Identity: Despite the challenges, Jaguar still held a strong reputation for luxury,
performance, and iconic design. Some popular models from this era include the XJR sports
sedan and the XK coupe.
 Ford launched the X-Type, a more affordable Jaguar, but it was criticized for being too
similar to a Ford Mondeo.
 Overall, Jaguar's sales were declining in the years leading up to the Tata acquisition.
 The Tata acquisition in 2008 marked a turning point for Jaguar.

LAND ROVER
Land Rover's path before the Tata acquisition in 2008 had some similarities and some
differences to Jaguar:
 Ownership: Just like Jaguar, Land Rover was also under the ownership of Ford Motor
Company's Premier Automotive Group. Ford acquired Land Rover alongside Jaguar in
1989 from BL (British Leyland).
 Challenges: Land Rover, similar to Jaguar, faced issues in the years leading up to the Tata
purchase. Their classic designs were seen as dated, and competition in the off-road SUV
market was heating up. While Ford invested in quality improvements, Land Rover
struggled to gain significant traction in the luxury SUV segment.
 Brand Identity: Land Rover, compared to Jaguar's focus on luxury cars, had a strong
reputation for off-road capability and ruggedness. Iconic models like the Defender and
Discovery solidified this image.
 Market Position: Land Rover, unlike Jaguar attempting a more affordable model,
maintained its focus on the premium off-road SUV market. This niche positioning helped
them retain a loyal customer base.
 Ford made efforts to modernize Land Rover with models like the Range Rover Sport, but
overall sales figures were stagnant.
 Land Rover benefitted from a strong association with the British motoring heritage,
particularly their association with the British countryside and royalty.
The Tata acquisition in 2008 provided Land Rover with the resources to invest in new
technology and expand their model range, while still retaining their core brand identity.

Tata & Tata motors

The Tata name in India carries immense weight. The Tata Group, founded in 1868, is a
sprawling conglomerate that has its hands in everything from steel and software to tea and
telecommunications. Think of it as an Indian General Electric, a powerful force in the nation's
economy and a leader in philanthropy. One key subsidiary under this vast umbrella is Tata
Motors. Established in 1945, Tata Motors began with locomotives but has grown into a major
automotive manufacturer. They are the leading name in India's commercial vehicle market, and
a top contender for passenger vehicles as well. In a bold move, Tata Motors acquired the
prestigious British brands Jaguar and Land Rover in 2008, showcasing their global ambitions.
So, while Tata encompasses a vast range of industries, Tata Motors is the driving force behind
their automotive endeavours, known for innovation and building a future-oriented vision for
mobility solutions.

The Tata Transformation: An In-Depth Analysis of the Jaguar Land Rover

Acquisition
The year 2008 witnessed a pivotal moment in the automotive industry when Tata Motors, a
rising Indian automaker, acquired the iconic British brands Jaguar and Land Rover (JLR) from
Ford Motor Company. This audacious move, valued at $2.3 billion, sent shockwaves through
the industry, raising questions about Tata's capabilities and the future of the storied British
marques. This analysis delves deep into the complexities of the acquisition, exploring the pre-
acquisition struggles, strategic considerations, challenges faced, and the long-term impact for
all parties involved.

A Glimpse into the Past: Pre-Acquisition Struggles

Jaguar: By the late 2000s, Jaguar, despite its rich heritage known for sleek sedans and
powerful sports cars, faced challenges. Their designs had become outdated, failing to attract
younger buyers. Ford's attempt to enter the affordable luxury segment with the X-Type
backfired, lacking the brand's core DNA.

Land Rover: Renowned for its off-road prowess and rugged SUVs, Land Rover also faced
difficulties. Their classic designs felt stagnant, and they struggled to compete in the burgeoning
luxury SUV market dominated by German and Japanese rivals. While retaining a loyal
customer base, Land Rover needed a refresh to truly compete in the premium segment.

Tata Motors: A Rising Power with Global Ambitions

Established in 1945, Tata Motors had grown into a major Indian automaker with a strong
domestic presence. With ambitions of expanding globally, they recognized the immense
potential in the heritage and brand recognition of Jaguar and Land Rover. The struggling state
of the brands under Ford's ownership presented a unique opportunity for Tata Motors to acquire
them at a significant discount.
The Deal and its Strategic Considerations

Benefits for Tata Motors:

 Access to Established Luxury Brands: JLR offered a loyal customer base, global
presence, and a strong brand image, allowing Tata Motors to enter the international luxury
car market.
 Technological Expertise: Merging with JLR provided access to advanced automotive
technologies like engine design and manufacturing processes.

Challenges of the Acquisition:

 Financial Strain: The 2008 financial crisis struck shortly after the deal, putting immense
financial pressure on Tata Motors. They had to secure additional funding for integration
and manage existing debt while JLR sales were initially sluggish.
 Cultural Integration: Merging a multinational giant like Tata Motors with established
British brands presented cultural challenges. Differences in work styles, management
philosophies, and brand identities needed to be navigated sensitively.
 Technological Integration: JLR had fallen behind in some technological areas. Tata
Motors had to invest heavily in research and development to bridge the gap with
competitors like BMW and Mercedes-Benz.

Strategies for Success: Balancing Heritage and Innovation

Tata Motors displayed remarkable foresight in their approach:
 Respecting Heritage, Embracing Innovation: Recognizing the inherent value of JLR's
brand identities, Tata committed to preserving their heritage and luxury essence. However,
they also focused on investing in new technologies and modern designs. The F-TYPE
sports car revived Jaguar's performance focus, while the XE sedan offered a modern and
luxurious alternative. Land Rover capitalized on the SUV boom with the Range Rover
Evoque, a critical and commercial success. Both brands incorporated fuel efficiency and
greener technologies.
 Focus on Brand Differentiation: In a crowded luxury market, Tata understood the need
for clear differentiation. They emphasized JLR's unique selling points – Jaguar's focus on
performance, design, and driving dynamics, and Land Rover's off-road capability and
adventurous spirit.
 Leveraging Synergies: The acquisition allowed Tata Motors to optimize production
processes and share resources across the company, leading to cost reductions and improved
efficiency.

The Outcome and Long-Term Impact

The impact of the acquisition has been significant for all parties involved:
 Resurgence of Iconic Brands: Under Tata's leadership, both Jaguar and Land Rover
experienced a renaissance. They achieved record sales figures and expanded their global
reach, particularly in emerging markets like China and India.
 Boost for Tata Motors: The acquisition solidified Tata Motors' position as a major player
in the global automotive industry. JLR's brand recognition and technological advancements
allowed Tata Motors to compete more effectively with established European luxury
carmakers.
 A Global Automotive Powerhouse: The JLR acquisition transformed Tata Motors from a
primarily domestic Indian automaker into a true global force. It showcased India's growing
presence in the international automotive landscape, inspiring other domestic carmakers.
Beyond the Headlines: Challenges and Opportunities
Despite the success story, there are ongoing challenges:
Maintaining Brand Identity: Balancing innovation with preserving the core brand identities
of Jaguar and Land Rover remains

Despite these challenges, the acquisition of Jaguar Land Rover by Tata Motors remains a
remarkable success story. It is a testament to Tata's strategic vision, their commitment to
respecting heritage while embracing innovation, and their ability to navigate the complexities
of a global business landscape. The story continues to unfold, and it will be interesting to see
how Tata Motors and JLR navigate the future of the automotive industry together.

CASE II: HERO-HONDA

HERO GROUP:
The Hero group's journey began with the formation of Hero Cycles Limited in 1956 in
Ludhiana, Punjab, India and was founded by the Munjal brothers. Hero Cycles quickly became
the largest bicycle manufacturer in India and one of the largest in the world.
This success in bicycles led to an expansion in motorcycles industry. The group ventured into
motorcycle manufacturing in collaboration with Honda forming a Joint Venture (JV) company
in 1984.
The decision to enter a joint venture with Honda was strategic, as it allowed the Hero Group to
leverage Honda's technological expertise and brand reputation in motorcycles while tapping
into the growing demand for motorized two-wheelers in India.

HONDA MOTOR:
Prior to the establishment of the Hero Honda joint venture, Honda was already a well-
established and globally recognized automotive manufacturer based in Japan.
Honda Motor Co., Ltd. was founded in 1946. Initially, the company focused on producing
motorized bicycles. Honda's strong engineering capabilities and innovative approach swiftly
propelled the company into the automotive sector.
In the 1960s, Honda expanded its operations to include automobiles. The company introduced
its first production automobile, the Honda S500 sports car, in 1963. Subsequently, Honda
gained a reputation for producing fuel-efficient, reliable, and well-engineered vehicles.
Honda embarked on a strategy of global expansion, establishing manufacturing facilities and
sales networks in various countries. By the time of the Hero Honda joint venture, Honda had a
strong presence in numerous international markets, including the United States, Europe, and
Asia.
Honda was known for its commitment to technological innovation. The company introduced
several groundbreaking technologies, including the CVCC engine for cleaner emissions, the
VTEC variable valve timing system, and the introduction of hybrid electric vehicles with the
Honda Insight.
Prior to the Hero Honda joint venture, Honda had already established itself as a leading
manufacturer of motorcycles. Honda's motorcycles were renowned for their performance,
reliability, and technological innovation. The company had a wide range of motorcycle models
catering to various market segments globally.
Honda was guided by the philosophy of "Respect for the Individual" and "The Three Joys,"
which emphasized the joy of buying, selling, and creating. These principles shaped Honda's
approach to business and product development.
Hero Honda Merger
Strategic Partnership: Recognizing the growing demand for motorcycles in India and
Honda's expertise in motorcycle manufacturing, Hero Cycles Limited, led by the Munjal
family, sought a strategic partnership with Honda. Honda, on the other hand, was interested in
entering the Indian market, which had substantial growth potential.

Formation of the Joint Venture: In 1984, Hero Cycles Limited and Honda Motor Company
entered into a joint venture agreement to establish Hero Honda Motors Limited. The joint
venture aimed to manufacture motorcycles in India using Honda's technology and expertise
combined with Hero's understanding of the Indian market.
Production Commencement: The joint venture commenced production at its manufacturing
facility in Dharuhera, Haryana, India. The initial focus was on producing motorcycles that
catered to the needs of Indian consumers, emphasizing reliability, fuel efficiency, and
affordability.

Product Launches: Hero Honda Motors Limited launched its first motorcycle, the Hero
Honda CD100, in 1985. This was followed by the launch of other successful models such as
the Hero Honda Splendor, Hero Honda Passion, and Hero Honda CBZ, among others. These
motorcycles quickly gained popularity and became dominant players in the Indian market.

Market Leadership: The Hero Honda joint venture quickly rose to prominence, dominating
the Indian motorcycle market with its high-quality products and extensive distribution network.
The joint venture held a significant market share for decades, setting new benchmarks for
success in the Indian automotive industry.

Expansion and Evolution: Over the years, Hero Honda Motors Limited expanded its product
portfolio, manufacturing capabilities, and market reach. The joint venture continued to
innovate and introduce new models to meet the evolving demands of Indian consumers.

The Hero Honda joint venture was a pioneering collaboration that revolutionized the Indian
motorcycle industry. It played a crucial role in popularizing motorcycles in India and
contributed to the growth of the country's automotive sector.

Hero Honda Demerger

On December 16, 2010, the Hero Group based in India and Honda Motor Co. from Japan
reached an agreement to dissolve their partnership, marking the end of one of the most
prosperous joint ventures in the Indian automotive sector. The decision to part ways stemmed
from unresolved disagreements and divergent strategies for the Indian and global markets.
Honda opted to divest its 26% stake in the venture to the Munjal family, owners of Hero, as
part of their amicable separation. Despite the split, Honda committed to providing
technological assistance to Hero until 2014, while Hero agreed to continue paying royalties to
Honda.
The Munjal’s, through their private holding entity Hero Investments, acquired Honda's 26%
stake in the joint venture, increasing the Indian promoter's ownership to 52%. The transaction,
valued at 739.97 per share, was completed at a significant discount compared to the market
price on the Bombay Stock Exchange.
Due to the trade disputes Hero Moto Corp Ltd., under the leadership of the Munjal family, had
started the discussion to break the joint venture
The main reasons for disputes that was figured out were:
1. Honda introduces new motorbike: This was a violation of their agreement as the
Honda scooter introduced the new motorcycle to the Indian market. A deal was reached
between the two companies to stop Honda from manufacturing and selling motorcycles
in the Indian market. Hero was directly challenged by this, and a rift was created.
2. Research & Development: Hero intended to spend $1 billion on R&D and develop
its engine technology, which posed a challenge to Honda Ltd. because Hero was paying
the engine's royalty.
3. Board Member: Hero Honda Ltd. has four members, whereas Honda Ltd. has none.
For Honda, all the blueprints and details were readily available.
4. Export issue: the joint venture (JV) was intended to produce motorcycles domestically,
per the terms of the agreement signed by Hero and Honda. However, Honda failed to
assist Hero in appointing and persuading dealers to market Hero Honda products when
Hero sought to export Hero Honda products.

COMPARISON BETWEEN THE CASES

Similarities:
 Strategic Partnerships: Both cases involve strategic partnerships between companies
with complementary strengths. In the case of JLR, Tata Motors leveraged its resources
to acquire established luxury brands, while in Hero-Honda, Hero Group partnered with
Honda to leverage its technological expertise and brand reputation.
 Market Challenges: Prior to the acquisitions, both Jaguar and Land Rover, as well as
Hero Honda, faced significant challenges in their respective markets. Jaguar and Land
Rover struggled with outdated designs and market competitiveness, while Hero Honda
aimed to tap into the growing demand for motorcycles in India.
 Integration Challenges: Both acquisitions presented integration challenges, including
financial strain, cultural differences, and technological integration. Tata Motors had to
navigate financial difficulties after the acquisition, while Hero and Honda faced
disagreements over various issues such as product launches, research and development,
and board representation.
 Long-term Impact: Both acquisitions had a significant long-term impact on the
companies involved. Tata Motors transformed into a global automotive powerhouse
with the acquisition of JLR, while Hero Honda's joint venture revolutionized the Indian
motorcycle industry before their eventual demerger.
Differences:
 Industry Focus: The industries involved in the two cases differ, with JLR operating in
the luxury automotive sector and Hero-Honda focusing on the motorcycle industry.
This difference in industry dynamics influenced the strategic considerations and
challenges faced by each company.
 Ownership Structure: The ownership structures of the acquired companies differed in
each case. In the JLR case, Tata Motors acquired both Jaguar and Land Rover from
Ford, while in Hero-Honda, the joint venture was formed between Hero Group and
Honda, with Honda holding a minority stake.
 Reasons for Acquisition: The motivations behind the acquisitions differed between the
two cases. Tata Motors aimed to expand its global presence and access advanced
technologies through the acquisition of JLR, while Hero Group sought to leverage
Honda's expertise to capitalize on the growing demand for motorcycles in India.
 Outcome of Acquisition: The outcomes of the acquisitions also varied. Tata Motors
successfully revitalized the Jaguar and Land Rover brands, achieving record sales
figures and expanding their global reach. On the other hand, the Hero-Honda joint
venture dominated the Indian motorcycle market for decades before facing
disagreements leading to the demerger.

CONCLUTION
The two cases presented contrasting conclusions on the effectiveness of corporate action
through mergers and acquisitions (M&A) and joint ventures.

 Tata Motors' acquisition of Jaguar Land Rover (JLR) proved to be a success story. Tata's
strategic approach of respecting heritage while embracing innovation led to the revival
of JLR brands and solidified Tata Motors' position as a global player.

 The Hero Honda joint venture, however, ultimately ended in a split. Disagreements over
strategy, control, and technological independence led to a breakdown in the partnership.
Despite initial success in revolutionizing the Indian motorcycle market, Hero had to
navigate a separation and establish itself independently.

Overall, the conclusion suggests that M&A and joint ventures can be powerful tools for growth,
but their success hinges on multiple factors. These include:

 Strategic alignment and shared vision between the involved parties.

 Respect for existing brand identities and company cultures.
 Open communication and ability to address potential conflicts constructively.
 Technological compatibility or a plan to bridge technological gaps.

Carefully considering these factors can increase the chances of a successful M&A or joint
venture.
 REFERENCES
 https://www.tatamotors.com/
 https://www.jaguarlandrover.com/
 https://economictimes.indiatimes.com/prime/transportation/jlr-from-tatas-biggest-
mistake-to-a-money-spinner-how-focus-on-high-profit-cars-did-the-
trick/primearticleshow/104990093.cms?from=mdr
 https://www.autocarpro.in/news/exclusive-jlr-explores-ev-manufacturing-in-india-for-the-
world-119249
 https://www.mbaknol.com/management-case-studies/case-study-of-tata-motor-
acquisition-of-jaguar-and-land-rover/
 HERO - HONDA JOINT VENTURE BREAK-UP | M&A Critique (mergersindia.com)
 https://www.researchgate.net/publication/357835988_DEMERGER_AND_IT'S_IMPAC
T_ON_PERFORMANCE_A_CASE_STUDY_OF_HERO_HONDA_LTD
 https://en.wikipedia.org/wiki/Hero_MotoCorp
 https://www.scribd.com/doc/48314545/introduction-of-hero-honda
 https://en.wikipedia.org/wiki/Honda
 https://mnacritique.mergersindia.com/hero-honda-joint-venture-break-up/