I try to keep nationalist sentiments out of economic commentary, but Tata's purchase of Jaguar and Land Rover from Ford has to make some folks in India smile. Two of the UK's biggest brands will now be owned by a former colony that is still catching up economically.
Unsurprisingly, Ford lost money on its purchase and subsequent sale of the two companies. In my view, acquisitions seldom lead to big improvements for the firm making the acquisition. The market seems to recognize this, as announcement effects are often negative for the acquiring firms.
So do we expect the same fate for Tata--value destruction through the acquisition? Perhaps, perhaps not. Here is some interesting commentary from the Economic Times of India.