Tata Motors Limited (NYSE:TTM) is to buy Ford Motor Company (NYSE:F) (Ford Motor Company (NYSE:F))'s manufacturing plant in Gujarat, India for £75.34mln, in a bid to ramp up production.
The deal gives the Indian headquartered global automobile manufacturer an additional 300,000 units of production capacity, expandable to 420,000 units per year.
With its manufacturing capacity nearing saturation, Tata Motors said the acquisition is timely and a win-win for all parties.
A unit transfer agreement has been signed by Ford and the Tata Passenger Electric Mobility Limited (TPEML) subsidiary, that includes the transfer of all eligible Ford India employees at the Sanand, Gujarat plant.
As the unit is adjacent to TPEML's existing manufacturing facility at Sanand, a smooth transition should be possible, the companies said in a statement.
TPEML will invest in reconfiguring the plant to fit Tata Motors' existing and future vehicle platforms.
A tripartite agreement was signed between the Gujarat government, TPEML and Ford India Private Limited (FIPL) on May 30, 2022, to support all necessary approvals.
FIPL will continue to operate its power train manufacturing facility by leasing back the land and buildings of the plant from TPEML on mutually agreed terms.
Ford Motor Company (NYSE:F) transformation officer Steve Armstrong said in a statement the announcement represents an important step in Ford's ongoing business restructuring in India.
Last September, Ford India said it would cease vehicle production at two of its plants in the country.