Tata Motors shares, on Wednesday, fell 4.43 per cent on the Bombay Stock Exchange after news surfaced that the homegrown auto major has signed a deal with US automaker Ford to buy its British icons Jaguar and Land Rover.
Analysts said that the market reacted negatively to the report that Tata Motors had clinched the Jaguar and Land Rover (JLR) deal estimated to be valued between 2-2.5 billion dollars.
Tata Motors scrip that opened firm at Rs 690, up 1.47 per cent from its previous close of Rs 679.95, later parted with its initial gains. It touched an intra-day low of Rs 651.10, a fall of 4.43 per cent over its last close.
“The cost of borrowing would be expensive and in the short term, profitability would be affected,” domestic brokerage firm SMC Global Vice-President Rajesh Jain said.
As many as 4.57 lakh shares changed hands on the BSE till 12.53 hours. The scrip was trading at Rs 661, down 2.79 per cent in the afternoon trade. “These deals do not go favourably with big investors. In the short-run, there is a negative impact. However, in the long-run, it can be positive for the scrip,” Jain added.
According to sources close to the development, the deal was signed on Tuesday evening. When contacted, a Tata Motors spokesperson said the company would make an announcement at an “appropriate time”.
Ford on the other hand has been insisting that they would make public the deal only after it has informed its employees.