June 12, 2007
Ford's Historic M&A Legacy
It is being reported today that Ford Motor Co. is seeking buyers for its Premier Automotive Group (the potential deal is code-named Project Swift). The group includes the Volvo, Jaguar and Land Rover brands. Ford bought Jaguar in 1989 for $2.38 billion, Volvo in 1999 for $6.45 billion, and Land Rover in 2000 for $2.73 billion. Ford has previously agreed to sell Aston Martin to a U.K. investing consortium led by auto-racing champion David Richards for $848 million.
If it happens, the deal will be a historic one for many reasons, but for M&A history buffs it will mark closure on the first modern-day U.K./U.S. cross-border acquisition. Ford's acquisition of Jaguar plc in 1989 was made via a cash tender offer. However, unlike in other prior cross-border takeovers, Jaguar had a large shareholder presence: Jaguar’s American Depositary Securities were quoted on the Nasdaq and registered under the Exchange Act, at least 25% of Jaguar’s holders were located in the United States, and Ford itself held approximately 13.4% of Jaguar’s securities. The Ford offer was therefore required to comply with the governing takeover codes in two jurisdictions: the Williams Act in the United States and the City Code on Takeovers and Mergers and the Rules Governing Substantial Acquisition of Securities issued by the U.K. Panel on Takeovers and Mergers. According to M&A lore, the first time harmonization of the two systems was quite a nightmare and required extensive cooperation between the regulators of both nations and many a late night for lawyers attempting to coordinate the process across the Atlantic (all prior to the time of email and when phone calls were actually expensive).
But the lawyers and regulators succeeded. It was the first true cross-border acquisition and it stirred the SEC to begin a decade -long process to adopt specialized rules for cross-border takeovers culminating in the Cross-Border Release Exemptions adopted in 1999. Truly a land-mark transaction.
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