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Ford spent the next several months carefully assessing each of these suitors. There was far too much at stake to simply go with the highest bidder. Ford was the largest automaker in Britain. It had been making cars there for so long that most consumers considered it a domestic manufacturer. The United Kingdom was also Ford’s second-biggest market after the United States. Executives in Dearborn worried that, if they botched the sale of these two venerable British marques, British car buyers might turn their backs on the Blue Oval itself.
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The man charged with making sure that did not happen was Ford of Europe chairman Lewis Booth. While he understood the business case for selling both brands, that did not make it any easier for the British executive. He had spent much of the past couple of years trying to turn them into something resembling viable automotive enterprises. Many of their employees were close personal friends. Booth was a car guy, too, and no one could claim that title without having a special place in their heart for Jaguar. The last thing he wanted was to go down in history as the Englishman who turned the lights off. As a Brit, Booth knew better than most at Ford just what was at stake and proceeded cautiously. He became Ford’s conscience, carefully vetting each bidder and working closely with the British government and trade unions to bring them along every step of the way.

“All of our stakeholders have got to come with us. This has got to be done real well, and I think I’m the person to do it. The unions trust me, the government trusts me, the European Union trusts me and the Jaguar–Land Rover employees trust me,” Booth told Mulally, reminding him that Ford’s reputation in Britain hung in the balance. “I need to stay in Britain, because I’m the person that can get this done with minimum damage to Ford.”

Mulally agreed that negotiating the sale should be Booth’s top priority, though as the process dragged on, he began to wonder if the Brit really could bring himself to pull the trigger.

The British government was particularly concerned about the sale because the two brands were both based in the English Midlands—major employers in an otherwise depressed manufacturing region. The trade unions were anxious to see guarantees for workers and their pensions. Booth told both groups that he welcomed their input but said the final decision on whom to sell to would be Ford’s and Ford’s alone. He took great pains to make sure Ford made the right one. Booth studied the finances of the bidders to make sure they had enough money not just to cover the purchase price but also to keep both brands running. Ford would remain a major supplier to whoever ended up with Jaguar and Land Rover, so ensuring their future viability was critical to more than just Ford’s public image. Booth also demanded concrete commitments about how workers at the two brands would be treated by the new owner.

“It’s not a fire sale,” Booth told his team. “We have to do this right.”

By the fall of 2007, Ford had narrowed the field to three finalists: the two Indian manufacturers and Nasser’s One Equity Partners. Each was assigned a code name to prevent their identity from being leaked. Tata’s was “Tibet,” and it quickly emerged as Ford’s preferred customer.

Tata not only was one of the highest bidders but also had the clearest vision for what it intended to do with the two brands. Moreover, Booth quickly hit it off with the company’s chairman, Ratan Tata. He was a tough businessman but also evinced a great deal of integrity. Booth recognized him as a man Ford could deal with, one who understood the value of both properties and their unique place in the
world’s automobile market. Like Ford, Tata was a family-controlled company, which also helped. And the huge multinational conglomerate had the resources not just to buy Jaguar and Land Rover but also to invest in their futures.

The unions also came out in favor of Tata. They had been terrified by the mere mention of Jac Nasser’s name and were worried a return to his control would mean a new era of deep cuts and layoffs. But Nasser’s bid was always a long shot. One Equity Partners had plenty of money, but Bill Ford was not eager to sell the brands to his onetime nemesis. The two men had set aside their differences, but Ford knew Nasser would go out of his way to rub his nose in it if he got hold of Jaguar and Land Rover and managed to turn them into profitable enterprises.

As for Mahindra, Ford quickly realized the Indian tractor company was primarily interested in Land Rover and would probably resell Jaguar as soon as it got a chance. Booth left Mahindra in the mix because it gave Ford leverage with Tata. Tata was a much larger company, and it would not have looked good back home if it lost out to its smaller rival.

On January 3, 2008, Booth announced that the Indian carmaker had emerged as its preferred bidder and said formal negotiations on the terms of a sale were now under way. In the United States, the news was met with some dismay. A few dealers objected loudly, arguing that selling the high-end English brands to an upstart Indian automaker would destroy their luxury image. But it was received rather more calmly in Britain itself, where four centuries of shared history and a love of takeout curry dampened any indignation over a sale to an Indian company. Tata already owned Tetley, one of England’s most popular tea companies, as well as the Taj hotel and resort chain. And the Indian conglomerate was well-known to the British government and labor unions because of its recent purchase of Anglo-Dutch steel giant Corus.
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On March 26, Ford announced that it had reached an agreement to sell Jaguar and Land Rover to Tata for approximately $2.3 billion.
It was less than Ford had paid for Jaguar alone almost twenty years before and did nothing to make up for the billions the automaker had pumped into the brands. But Mulally was glad to see the end of them. For too long, Jaguar and Land Rover had distracted Ford from the more pressing task of getting its own house in order.
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Besides, Ford needed the cash. A week earlier, Mulally had warned Wall Street analysts that the growing credit crisis was making it a lot harder for consumers to finance new car and truck purchases.

D
espite the accelerating decline of new vehicle sales in the United States and other major markets, York remained bullish about Ford. He told Kerkorian that the Dearborn automaker seemed to be doing everything they had tried to convince General Motors to do back in 2006. And Ford’s stock was trading at levels not seen since the 1980s. On April 2, 2008, Kerkorian began buying. Two days later, he sent York to the Glass House to meet Mulally in person.

The get-together was hastily arranged by Don Leclair, who was a longtime friend of York. Not that Mulally needed much persuading; he had read about York’s efforts to reform GM and was eager to meet the industry gadfly face-to-face. The meeting ended up being something of a lovefest. York told Mulally how impressed he was with the changes he was making at Ford. Mulally told York how much he had thought of his ideas to save GM. As York stood up to leave, he told Mulally and Leclair that his boss Kerkorian was “interested in investing in Ford.” After York briefed Kerkorian on the meeting, Tracinda bought another 6.5 million shares.

On April 24, Ford reported its financial results for the first three months of 2008. Once again the company was back in the black, with a surprise profit of $100 million. But no one in Dearborn was
smiling. The same day Mulally announced those better-than-expected earnings, he also announced that Ford was slashing production in North America by 100,000 units in the second quarter and said deep cuts to the company’s white-collar workforce would be necessary to protect the automaker from the economic crisis it now openly anticipated. The rising price of oil and other commodities was eroding Ford’s margins, and 4,200 hourly workers had signed up for the latest buyouts—about half as many as the company needed. Yet another round of buyouts would begin soon, but Ford recognized that its factory workers shared its own concern about the economy. They were reluctant to give up their guaranteed employment in an uncertain job market. Nonetheless, Mulally promised that Ford would continue to do whatever was required to make good on his pledge to deliver a full year of profits in 2009.

Kerkorian played his hand four days later. On April 28, his company issued a press release announcing that he had amassed 100 million shares in Ford since April 2 and planned to tender a public offer for 20 million more at a premium of a buck a share over the latest closing price. That would give Kerkorian more than 5 percent of the company—not enough to force its hand, but too much to ignore.

“Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Ford’s management was starting to achieve highly meaningful traction in its turnaround efforts. Last week this was reinforced by Ford’s first quarter 2008 results, achieved despite the difficult U.S. economic environment,” it stated. “Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.”

News of Kerkorian’s interest in Ford sent shock waves through the company and the family. The Ford heirs were scheduled to hold their regular spring meeting on May 3. Many arrived demanding to know what Bill Ford was going to do to protect them and their investment from one of the most disruptive forces in the American automobile industry. It had been only a year since he had welded the schism in the family shut, and Ford was not about to let it start opening up again. He assured his relatives that there was nothing Kerkorian or
anyone else could do to win control of the automaker without their consent. Ford also told them that Kerkorian’s sudden interest in their company made it more important than ever for the family to remain united behind Mulally.

Bill Ford did not know it, but York was already making discreet inquiries, asking people how much it would cost to buy out the Ford family. It was not clear that Kerkorian knew about it, either. But York had been salivating ever since he read about the split in the family a year earlier. He was convinced that, once the crack was opened, it would only get wider and deeper. For years York had been dreaming of leading a successful car company. With Kerkorian’s money behind him, he just might have a chance to become part of the miraculous comeback taking shape in Dearborn.

On May 9, Kerkorian sent a formal offer to Ford shareholders. In it he revealed that York had met with Alan Mulally and Don Leclair and informed them of Tracinda’s interest in Ford. Neither Mulally nor Leclair had mentioned York’s comments to Bill Ford, and he was not happy. When the executive chairman learned that Leclair had been having one-on-one conversations with Kerkorian’s emissary, he became furious. Ford wanted to know just what Leclair had been up to with York and Kerkorian.

The truth was Leclair was growing increasingly alarmed by the state of the economy and increasingly worried about Ford’s ability to ride out a storm of the magnitude he believed was about to strike. Leclair was a master of game theory and wanted to keep Tracinda close at hand in case the company needed to raise additional cash quickly. By the middle of 2008, there were few other options left. Ford also had feelers out to sovereign wealth funds at the time and was even talking to the Chinese. Leclair knew that he could issue additional equity and get Kerkorian to buy it. Mulally, too, was keen to keep every funding option open. But he was also flattered by York’s gushing admiration and viewed Kerkorian’s interest as a powerful endorsement of his turnaround plan. Mulally insisted that it was all just a big misunderstanding.

The company issued a statement to that effect. Bill Ford told Mulally not to let it happen again, and the board admonished both
Mulally and Leclair to be more careful. The board accepted Leclair’s explanation of the situation, but it hurt the CFO’s standing with Bill Ford and the other directors. They were well aware of the disruptive role Kerkorian and York had played at GM and Chrysler, and they were not about to let history repeat itself. The directors made it clear that no matter how many shares Kerkorian acquired, he would not be able to buy a seat on Ford’s board the way he had on GM’s.