Ford set to pick Jaguar frontrunner in days: source

LONDON (Reuters) - Ford Motor Co (F.N). is set to choose a frontrunner to buy European brands Jaguar and Land Rover around the end of this week as it moves towards a sale early in 2008, said a person close to the matter on Monday.

India's Tata Motors (TAMO.BO) is most likely to become preferred bidder in the talks with Ford, as it has the backing of the UK-based brands' unions and is viewed as a long-term owner that will invest in the units, said the person.

Tata, Indian rival Mahindra & Mahindra (MAHM.BO) and U.S.-based private equity firm One Equity Partners emerged last month as the last bidders left in the race for Jaguar and Land Rover.

Ford is spinning off the British luxury brands in order to focus on restructuring its loss-making North American operations.

Union leaders at Land Rover and Jaguar's UK factories voted late last month to support the Tata bid on the grounds the workforce's best interests "would be served by finding a partner with an established presence and background in manufacturing."

Backing from the unions, which had held meetings with all three final suitors, could be relevant for the politically-sensitive deal, as Ford would remain a major employer in the UK even after it sells the two luxury brands.

The bidders have also held talks with the British government, which is keen to safeguard jobs, in recent weeks, said the person.

The winning bidder is expected to pay about 1 billion pounds ($2 billion) for the two brands, but the cash amount has yet to be fully determined and is just one of Ford's considerations.

"First and foremost in our minds is to make sure that we sell to a buyer that looks to grow (the brands)," Mark Fields, Ford's president for the Americas, said last week.

Ford said on Monday: "No final decisions have been made (on a buyer) and we anticipate reaching an agreement early next year." The company declined to comment further on the process.

(Reporting by Mathieu Robbins; Editing by David Holmes)