By Poornima Gupta
DETROIT (Reuters) - A top private equity investor on Sunday questioned the logic of a deal by Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) that could spin off British car brands Jaguar and Land Rover to an Indian car maker, combining ultra-luxury with ultra-cheap vehicles in a single company.
"I don't understand how a company that's going to make cars for $2,000 can sell cars for $120,000," said Thomas Stallkamp, a partner with private equity firm Ripplewood Holdings, which had been among the bidders for Jaguar and Land Rover.
"The specifics of how you merge a car company that's hardly a car company right now with those iconic brands is somewhat problematic," Stallkamp, who is also the former president of Chrysler, said at the Reuters Autos Summit in Detroit.
Ford has narrowed the auction of Jaguar and Land Rover to three bids. The remaining bidders include Indian carmaker Tata Motors Ltd (TAMO.BO: Quote, Profile, Research, Stock Buzz) and rival Mahindra & Mahindra Ltd (MAHM.BO: Quote, Profile, Research, Stock Buzz), which has teamed up with buyout firm Apollo.
The U.S. automaker has been exploring a sale of the brands since June and has said it expects to strike a deal by early next year at the latest. The brands have been valued by a Merrill Lynch analyst at as much as $1.5 billion combined.
Stallkamp, who said he was disappointed that Ripplewood's bid was dropped, did not see any synergies between the current operations of Tata Motors, India's top vehicle maker, and the British brands.
"I think they would have to run it as a separate company," Stallkamp said. "It may not even part of the motor company because the motor company is pretty well tapped out for its own credit and Tata has all kinds of holdings."
"I don't see the synergies of it," he added. "It may be worth more to them strategically." Continued...
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