Tata Motors Limited (NYSE: TTM) intends to boost its electric vehicle manufacturing capabilities with the acquisition of one of the manufacturing facilities of Ford Motor Company (NYSE: F). The financial terms of the transaction have been kept under wraps.
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Both the companies performed well in the market on Friday. While ADRs of Tata Motors inched up 0.7% to close at $28.19, shares of Ford Motor grew 3.9% to $13.63 on Friday.
Inside the Headlines
Tata Passenger Electric Mobility Limited (TPEML), the electric vehicle arm of Tata Motors, and Ford India Private Limited (FIPL), the Indian unit of Ford Motor, are the two main parties involved in the transaction.
A Memorandum of Understanding has been signed between TPEML, FIPL, and the Government of Gujarat (an Indian state) to acquire FIPL’s Sanand-based facility. The MOU will be followed by the signing of an agreement between the parties in the near future.
It is worth noting here that this transaction will include the Sanand facility’s machinery, equipment, land & buildings, manufacturing plant, and talented workforce. Also, TPEML will boost the facility’s capabilities by investing in equipment and machinery.
Stock Rating
Ford Motor has a Moderate Buy consensus rating on TipRanks based on eight Buys, nine Holds, and two Sells. Also, F’s average price target of $19.94 suggests 46.29% upside potential from current levels. Tata Motors doesn’t have a consensus rating on TipRanks.
While ADRs of Tata Motors have grown 29.37% over the past year, shares of Ford Motor have lost 8%.
Bloggers’ Stance
As per TipRanks, financial bloggers are 66% Bullish on TTM, in line with the sector average.
Meanwhile, 88% of financial bloggers are Bullish on F, compared to the sector average is 65%.
Conclusion
The acquisition is expected to be beneficial for TPEML, as it will enhance the company’s electric vehicle manufacturing capabilities.
Meanwhile, the deal is in sync with Ford Motor’s plans to refrain from making electric vehicles (for export purposes) in India.
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