UPDATE 1-Ford, Tata seen signing Jaguar MoU within 2 weeks

Fri Mar 7, 2008 7:00am EST

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By Pete Harrison

LONDON, March 7 (Reuters) - India's Tata Motors (TAMO.BO) is expected to sign a memorandum of understanding to buy Ford Motor Co's (F.N) luxury UK brands Jaguar and Land Rover in the next two weeks, a labour union negotiator said on Friday.

There are no roadblocks holding back the deal, but negotiations have proved complex, said Dave Osborne, national secretary for vehicle building at the Unite union.

Unite is the main union representing workers at Land Rover and Jaguar, and has about 12,000 members there.

A separate source close to the deal also said it could be concluded "within weeks".

Negotiations are now focusing on the future relationship between Ford and the two luxury brands, which will continue to take Ford engines and body parts and will share technology and intellectual property rights, the source added.

All Jaguar and Land Rover's petrol engines are built in a Ford plant in south Wales, supporting hundreds of jobs there. Diesel engines come from Ford's factory in Dagenham, east London.

STAKE IN THE SAND

Tata, India's top vehicle maker, has been in talks with Ford since it was chosen as the front-runner to buy the units a few days into 2008.

"We expect a memorandum of understanding between Ford and Tata to be signed within the next couple of weeks," Osborne told Reuters. "At the end of the day, this is between Ford and Tata, but that's the information we're picking up."

The deal, which would give the Indian automaker a substantial presence outside India, had been expected this week after a rough target date was leaked to the media.

"That was never cast in stone, but was more a stake in the sand," said the source. "This is complex as it's not a separating of the ways. The relationship between Ford and Jaguar and Land Rover will continue into the future."

"We have to make sure that agreements about how the businesses work together are properly understood by both sides."

Another source said the two sides were wading through "thousands of pages of agreements".

The deal received union backing last month after Tata ruled out selling on Jaguar or building Land Rovers in India. And this week Tata Chairman Ratan Tata said the group would retain the two brands' iconic image.

Ford has been exploring their sale since last June in an effort to shore up its balance sheet and reduce debt. A spokesman said it was still on track to conclude the deal in early 2008.

A spokesman for Tata Motors declined to comment on the timeframe, reiterating: "Discussions are going on. We are very positive. There are no roadblocks."

(Reporting by Pete Harrison and Rina Chandran; Editing by Louise Ireland and Jason Neely)

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