Jump in my Addison Lee: Jaguar Land Rover Considers Bid for Private Cab Company Addison Lee

May 20, 2019

2 min read

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What's going on here?

Jaguar Land Rover (JLR) is considering a potential £300 million acquisition of Addison Lee.

What does this mean?

Addison Lee’s owner (US private equity firm “The Carlyle Group”) has brought in Bank of America and Rothschild in an attempt to sell the private cab company. The sale of Addison Lee has attracted interest from private equity firms and technology companies. As well as them, JLR finds itself intrigued by the prospect. This would be a huge investment for JLR’s future as it attempts to prepare itself for an industry which is increasingly moving towards shared ownership and driverless cars. This is especially important for JLR as it has been struggling lately. It posted a quarterly loss of £3.4 billion in February which resulted in JLR’s announcement that it will cut a tenth of its staff (approx. 4500 jobs) this year. The company’s recent poor performance has been blamed on weak sales in China, the collapse of the diesel market and Brexit uncertainty. Yet the issue of adapting to a future that is dominated by driverless technology and carsharing is a challenge that JLR is trying to plan for.

What's the big picture effect?

Rapid technological advances mean that numerous industries are undergoing fundamental changes. This is having a huge impact on traditionally successful companies, who must either adapt to succeed again or fail as because they’re stuck in their old ways. In an attempt to stay ahead of the competition, JLR has already made some efforts to adapt to the future of the driverless car. In 2018, the Coventry-based manufacturer signed a deal worth up to £1.3 billion to supply 20,000 cars to Waymo (whose parent company is Alphabet) to be converted to self-driving cars. Waymo will use this technology to develop its ride-hailing service and challenge competitors such as Uber with its advanced technology. However, JLR needs to continue to secure more deals to show that it will not be a slow starter in this brave new world of driverless cars and car sharing.

The acquisition of Addison Lee would do exactly that. Addison Lee currently has almost 5000 vehicles operating in London and offers hire services in around 350 cities globally. In October 2018, Addison Lee signed a deal with the autonomous driving tech company Oxbotica, with the aim of sending fully autonomous vehicles onto the roads of London by 2021. With Addison Lee facing the same problems as Waymo in fighting off the immense competition that Uber poses, teaming up with a key manufacturer would be a smart move. Moreover, since the end of 2018, JLR and Addison Lee have been collaborating on the ServCity project which aims to create a premium mobility service. It could do this by developing several autonomous Land Rover models.

Deals like this can be unpredictable – the Carlyle Group initially encouraged large private equity firms such as CVC Capital to consider making an offer. Can JLR capitalise on this crucial opportunity?

Report written by Will H

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