Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000 but had to put the British brands up for sale after sustaining major losses from the businesses, amounting to a record $12.6 billion in 2006.
"We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact," Tata Motors Chairman Ratan N. Tata said.
Under the deal, expected to be closed in the second quarter, Ford will continue to supply Jaguar and Land Rover with powertrains, stampings and other vehicle components.
Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services, Tata Motors said.
Ford will also pay around $600 million into the pension funds of Jaguar and Land Rover, Tata Motors said.
The sale comes as the U.S. automaker concentrates on its core Ford brand.
Ford CEO Alan Mulally said: "Jaguar and Land Rover are terrific brands. We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all."
