Indian M&A Deals
R-Power to pick 100% in Indonesia coal mine.
The coal mine, which has resources of 2 billion tonnes, is spread over 100,000 acres, equivalent to Greater Mumbai area. Reliance Power is understood to have acquired the coal mine for about Rs 1,000 crore. It has acquired 100% interest in this coal mine. When contacted, Reliance officials declined to comment on the development.
Experts say that this coal mine could be compared to one of the largest coal mines in India — the Gevera coalmine — in Chhattisgarh which has reserves of 1.2 billion tonnes and is producing around 35 million tonnes annually. Given that the acquired mine has resources of 2 billion tonnes, it is expected that the production from this mine should be more than the largest mine in India.
The coal mine, which has resources of 2 billion tonnes, is spread over 100,000 acres, equivalent to Greater Mumbai area. Reliance Power is understood to have acquired the coal mine for about Rs 1,000 crore. It has acquired 100% interest in this coal mine. When contacted, Reliance officials declined to comment on the development.
Experts say that this coal mine could be compared to one of the largest coal mines in India — the Gevera coalmine — in Chhattisgarh which has reserves of 1.2 billion tonnes and is producing around 35 million tonnes annually. Given that the acquired mine has resources of 2 billion tonnes, it is expected that the production from this mine should be more than the largest mine in India.
RCom to buy European WiMax company.
Reliance Communications (RCom), the country’s second-largest wireless operator, is close to acquiring a Europe-based specialty WiMax operator.
A source said that RCom is at an advanced stage of discussions and the deal would be sealed next fiscal.
It would be in the range of $300-400 million and would be done through a global subsidiary, which will come under Reliance Globalcom.
Reliance Communications (RCom), the country’s second-largest wireless operator, is close to acquiring a Europe-based specialty WiMax operator.
A source said that RCom is at an advanced stage of discussions and the deal would be sealed next fiscal.
It would be in the range of $300-400 million and would be done through a global subsidiary, which will come under Reliance Globalcom.
Merger, Indian Style:
Buy a Brand, Leave It Alone
By ERIC BELLMAN in Mumbai, India, and JACKIE RANGE in New Delhi
March 22, 2008; Page A9
Ford Motor Co.'s Jaguar and Land Rover brands might seem ripe candidates for a radical overhaul and a swift swing of the ax. Instead, India's Tata Motors Ltd., which is expected to formally agree to buy the brands in the coming week for $2 billion, likely will take a different approach: Do next to nothing.
Rather than seeking to wring profits out of two luxury automotive brands that frequently have lost money, Tata is looking to learn from them to help launch its own global expansion in autos, using the brands' own management team and a full roster of employees.
Tata sees benefits from their knowledge, their technology and their sales networks. Although the brands have been plagued by high manufacturing costs and other difficulties, Tata doesn't seem concerned about short-term losses.
Eventually, it may bring Jaguars and Land Rovers to India and sell its own cars overseas, which the company hopes will translate into profits over the longer term. An acquisition is less expensive than creating a global brand from scratch. This approach is common for Indian companies that, for the first time, are seeking to translate fast growth at home into an international presence. It is coming to define mergers and acquisitions, Indian-style.
India's Essar Global Ltd. last year paid more than $1.7 billion to acquire Canada's Algoma Steel Inc. and kept its management and its suppliers. Far from laying off employees and sending their jobs to India, Essar gave them a raise. Meanwhile, it sent a few directors to Canada to learn from the company.
Technology and outsourcing company Infosys Technologies Ltd. has $2 billion set aside for acquisitions, but will buy only when it is welcomed by, and can work with, the current management of targets.
Bharat Forge Ltd., one of India's largest auto-parts makers, has made many small acquisitions in the U.S. and Europe and done little to shake them up.
"Indian companies and culture show a tendency not to come in and turn things upside down," said Gene Donnelly, global managing partner for advisory and tax at PricewaterhouseCoopers in New York, who has helped advise many India companies on how to deal with mergers and acquisitions. "A Western acquirer goes in and says, 'I need to take costs out.'"
Tech giant Wipro Technologies, which has spent more than $1 billion on overseas acquisitions in the past few years, looks in part to its new takeover targets to teach it things, like how to understand local culture, the buying habits of customers, or the expectations employees will have about vacation.
In many cases, managers later are given a larger part of the Wipro Ltd. unit to run. For example, Tim Matlack, who headed the energy and utilities consultancy business of American Management Systems Inc., which Wipro bought in 2001, now heads up Wipro Technologies' global consulting business.
"From our point of view, it's important; culturally, strategically, sometimes even technologically and of course, financially to get the team to continue to run that business," said Lakshminarayana, chief strategy and M&A officer for Wipro Technologies (who goes by one name).
No company has played a greater role in crafting that approach to acquisitions than Tata Group, India's flagship industrial conglomerate and most active international acquirer. "We have sought to keep management in place after we acquire a company," Ratan Tata, chairman of Tata Motors as well as Tata Sons Ltd., the holding company for the conglomerate, said in a recent interview. "We pride ourselves on our ability to motivate management's plans."
One of the first major international acquisitions by an Indian company was Tata Tea Ltd.'s takeover of one of the U.K.'s biggest tea brands, Tetley Tea, in 2000.
To this day, no Tetley directors or senior management have been asked to leave. Tata, instead, has sent its managers to work for Tetley and learn about tea buying and branding and exporting to new markets. Tata Tea, for its part has invested more money in Tetley and helped it expand through its own acquisitions.
"Experts say you have to slash, burn, cut and we have not. People might say that is foolish," says R. K. Krishna Kumar, president and managing director of Tata Tea. "Sometimes acquisitions should have an equivalent impact on the acquiring company."
He says Tata Tea has applied what it learned from Tetley about making quality consistent for all its tea brands. It has also taken the Tetley brand to new markets, like neighboring Pakistan and Bangladesh.
Another Tata company, Tata Steel Ltd., bought the Anglo-Dutch steel company Corus Group PLC last year for around $12 billion, leaving its management team intact and retaining its employees. From the Corus deal, Tata Steel plans to learn about making higher-quality steel for the booming automotive industry in India.
Still, some are skeptical about the latest potential acquisition by Tata Motors, maker of inexpensive cars and trucks, including the $2,500 "people's car" called the Nano. Tata's current vehicles are "basic nuts and bolts," says Robert Lutts, a Tata shareholder who manages about $500 million as president and chief investment officer at Cabot Money Management in Salem, Mass.
"Once you get into Jaguar/Land Rover, you can make big mistakes... The luxury business is very fickle."
Tata Motors' approach gave it an edge over competing private-equity firms looking at Land Rover and Jaguar. Roger Maddison, an official with the U.K. trade union Unite, said that when he and other labor representatives first learned of Tata's interest in the auto brands, they were relieved.
The unions asked for assurances that Tata wouldn't cut costs in the U.K. by outsourcing assembly of certain components to India. As many as 40,000 jobs in the U.K. -- mainly in the supplier industry -- depend on the Jaguar and Land Rover brands. That doesn't include the roughly 16,000 people that Jaguar and Land Rover directly employ.
During a London meeting with Tata Motors executives in November, Mr. Maddison recalls, "We came straight down and said 'We've obviously got fears that you've got a massive component base across Asia. Would it be your intention to source from Asia into the U.K.?' They hit it straight back and told us 'No way.'"
He said the other private-equity bidders also said they would try to limit layoffs, but the unions support Tata Motors because of its history.
--Stephen Power and Edward Taylor in Frankfurt and Mike Spector in Detroit contributed to this article
Buy a Brand, Leave It Alone
By ERIC BELLMAN in Mumbai, India, and JACKIE RANGE in New Delhi
March 22, 2008; Page A9
Ford Motor Co.'s Jaguar and Land Rover brands might seem ripe candidates for a radical overhaul and a swift swing of the ax. Instead, India's Tata Motors Ltd., which is expected to formally agree to buy the brands in the coming week for $2 billion, likely will take a different approach: Do next to nothing.
Rather than seeking to wring profits out of two luxury automotive brands that frequently have lost money, Tata is looking to learn from them to help launch its own global expansion in autos, using the brands' own management team and a full roster of employees.
Tata sees benefits from their knowledge, their technology and their sales networks. Although the brands have been plagued by high manufacturing costs and other difficulties, Tata doesn't seem concerned about short-term losses.
Eventually, it may bring Jaguars and Land Rovers to India and sell its own cars overseas, which the company hopes will translate into profits over the longer term. An acquisition is less expensive than creating a global brand from scratch. This approach is common for Indian companies that, for the first time, are seeking to translate fast growth at home into an international presence. It is coming to define mergers and acquisitions, Indian-style.
India's Essar Global Ltd. last year paid more than $1.7 billion to acquire Canada's Algoma Steel Inc. and kept its management and its suppliers. Far from laying off employees and sending their jobs to India, Essar gave them a raise. Meanwhile, it sent a few directors to Canada to learn from the company.
Technology and outsourcing company Infosys Technologies Ltd. has $2 billion set aside for acquisitions, but will buy only when it is welcomed by, and can work with, the current management of targets.
Bharat Forge Ltd., one of India's largest auto-parts makers, has made many small acquisitions in the U.S. and Europe and done little to shake them up.
"Indian companies and culture show a tendency not to come in and turn things upside down," said Gene Donnelly, global managing partner for advisory and tax at PricewaterhouseCoopers in New York, who has helped advise many India companies on how to deal with mergers and acquisitions. "A Western acquirer goes in and says, 'I need to take costs out.'"
Tech giant Wipro Technologies, which has spent more than $1 billion on overseas acquisitions in the past few years, looks in part to its new takeover targets to teach it things, like how to understand local culture, the buying habits of customers, or the expectations employees will have about vacation.
In many cases, managers later are given a larger part of the Wipro Ltd. unit to run. For example, Tim Matlack, who headed the energy and utilities consultancy business of American Management Systems Inc., which Wipro bought in 2001, now heads up Wipro Technologies' global consulting business.
"From our point of view, it's important; culturally, strategically, sometimes even technologically and of course, financially to get the team to continue to run that business," said Lakshminarayana, chief strategy and M&A officer for Wipro Technologies (who goes by one name).
No company has played a greater role in crafting that approach to acquisitions than Tata Group, India's flagship industrial conglomerate and most active international acquirer. "We have sought to keep management in place after we acquire a company," Ratan Tata, chairman of Tata Motors as well as Tata Sons Ltd., the holding company for the conglomerate, said in a recent interview. "We pride ourselves on our ability to motivate management's plans."
One of the first major international acquisitions by an Indian company was Tata Tea Ltd.'s takeover of one of the U.K.'s biggest tea brands, Tetley Tea, in 2000.
To this day, no Tetley directors or senior management have been asked to leave. Tata, instead, has sent its managers to work for Tetley and learn about tea buying and branding and exporting to new markets. Tata Tea, for its part has invested more money in Tetley and helped it expand through its own acquisitions.
"Experts say you have to slash, burn, cut and we have not. People might say that is foolish," says R. K. Krishna Kumar, president and managing director of Tata Tea. "Sometimes acquisitions should have an equivalent impact on the acquiring company."
He says Tata Tea has applied what it learned from Tetley about making quality consistent for all its tea brands. It has also taken the Tetley brand to new markets, like neighboring Pakistan and Bangladesh.
Another Tata company, Tata Steel Ltd., bought the Anglo-Dutch steel company Corus Group PLC last year for around $12 billion, leaving its management team intact and retaining its employees. From the Corus deal, Tata Steel plans to learn about making higher-quality steel for the booming automotive industry in India.
Still, some are skeptical about the latest potential acquisition by Tata Motors, maker of inexpensive cars and trucks, including the $2,500 "people's car" called the Nano. Tata's current vehicles are "basic nuts and bolts," says Robert Lutts, a Tata shareholder who manages about $500 million as president and chief investment officer at Cabot Money Management in Salem, Mass.
"Once you get into Jaguar/Land Rover, you can make big mistakes... The luxury business is very fickle."
Tata Motors' approach gave it an edge over competing private-equity firms looking at Land Rover and Jaguar. Roger Maddison, an official with the U.K. trade union Unite, said that when he and other labor representatives first learned of Tata's interest in the auto brands, they were relieved.
The unions asked for assurances that Tata wouldn't cut costs in the U.K. by outsourcing assembly of certain components to India. As many as 40,000 jobs in the U.K. -- mainly in the supplier industry -- depend on the Jaguar and Land Rover brands. That doesn't include the roughly 16,000 people that Jaguar and Land Rover directly employ.
During a London meeting with Tata Motors executives in November, Mr. Maddison recalls, "We came straight down and said 'We've obviously got fears that you've got a massive component base across Asia. Would it be your intention to source from Asia into the U.K.?' They hit it straight back and told us 'No way.'"
He said the other private-equity bidders also said they would try to limit layoffs, but the unions support Tata Motors because of its history.
--Stephen Power and Edward Taylor in Frankfurt and Mike Spector in Detroit contributed to this article
http://ridingtheelephant.blogs.fortune. ... topstories
There’s another question hanging over the deal: Tata’s future once its 70-year old patriarch retires. He is not due to step down until he’s 75 - in December 2012 - but has said he would like to go earlier, and there are rumors it could be at the end of this year. That seems unlikely, if only because there is no clear successor. From inside the Tata family there is a reclusive cousin, Noel Tata, who runs some of Tata’s retail businesses, but there is no sign of him being groomed for the corporate and public life that goes with the job. One or two top executives from outside the family, and even outside the Tata Group, have also been rumored, but none has been publicly held out as a successor.
It is Tata that has provided the personal drive and leadership to turn Tata Motors into a business that can produce the Nano and buy two world famous brands - in the same year. There’s a big job waiting for someone – and Tata is not yet saying who. Until it does, the era uncertainty at Land Rover and Jaguar won’t be over.
Ford Sells Land Rover, Jaguar to Tata as Luxury Car Sales Slump
Tata acquires Jaguar and LR
$2.3 billion
Tata acquires Jaguar and LR
$2.3 billion
India's Tata Motors on wednesday acquired Ford's British marquees Jaguar and Land Rover for 2.30 billion dollars in an all cash deal, sealing a deal that it pursued for nine months.
Under the deal, Tata would continue to source engine from Ford, which would be paying about 600 million dollars toward the pension liabilities of Jaguar-Land Rover employees.
From Yahoo Finance
AP
Ford Sells Jaguar, Land Rover to Tata
Wednesday March 26, 8:28 am ET
By Tom Krisher, AP Auto Writer
Ford Sells Jaguar, Land Rover Businesses to India's Tata Motors in $2.3B Deal
DETROIT (AP) -- Ford Motor Co. is selling its Jaguar and Land Rover businesses to India's Tata Motors Ltd. in a $2.3 billion deal -- less than half the price that the struggling Ford paid for the two luxury brands.
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The deal announced Wednesday will expand the Indian carmaker's reach around the globe.
The agreement had been in the works for months as cash-strapped Ford sought money to fund its turnaround plan.
Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But it has been struggling and wants to focus on its main brands.
Tata said it expects no significant changes in the terms of employment for Jaguar and Land Rover's roughly 16,000 workers. It said Ford will pay about $600 million into the Jaguar-Land Rover pension fund at the closing, which is expected at the end of the second quarter.
"Jaguar and Land Rover are terrific brands," Ford CEO Alan Mulally said in a statement. "We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
DETROIT (AP) -- Ford Motor Co. is selling its Jaguar and Land Rover businesses to India's Tata Motors Ltd. in a $2.3 billion deal -- less than half the price that the struggling Ford paid for the two luxury brands.
The deal announced Wednesday will expand the Indian carmaker's reach around the globe.
Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But it has been struggling and wants to focus on its main brands.
Tata said it doesn't anticipate any significant changes to the work force at Jaguar and Land Rover. The sides had been expected to agree to keep the British work force around the current 15,300.
Tata said the transfer of the brands would take place the end of the second quarter.
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amit
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If Videocon manages to acquire Motorola's phone business it would give it a kick start into the international mobile phone business in a similar way that Lenovo got into the PC business by acquiring IBM's PC division.
However, turning around Motorola will be a big challenge. It's market share is declining steeply. For example of the 366 million handsets sold in the Asia Pacific region minus Japan, last year, Motorola's came in third behind Nokia and Samsung.
However, while Nokia's share was a staggering 50 per cent, Motorola had just 8.3 per cent share. Samsung had a 12.1 per cent share.
And Motorola's share shrunk by more than half of what it was in 2006. It had a 19.1 per cent share that year and was No2 behind Nokia's 42 per cent. Much of Motorola's share has been absorbed by Nokia since Samsung's share just increased marginally from 10.9 per cent in 2006 to 12.1 last year.
It's problems range from bad management to the declining popularity of the Razr brand.
In a nutshell, it would be great door opener for Videocon but it will be a real challenge to turnaround the company.
Incidentally Motorola is No1 in the US market, but that's a stagnant market much as Europe is. The action is in Asia and the company that does well in this crop of the woods wins the sweepstakes, as Nokia is doing at present.
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amit
- BRF Oldie
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Not really Vipul. As of last year despite all the growth, the India market had a 20 per cent mobile phone penetration rate while China had a 40 per cent rate. So there's still plenty of upside.Vipul wrote:Also the fact that market in Asia will saturate by 2010(in India) and in China (2008 end) and the going looks much tougher.
Experience across Asia Pacific shows that the market reaches saturation only after hitting more than 100 per cent, say around 105 per cent or so. This would mean more than 2 billion handsets, when India and China are taken together and discounting all the other countries like Indonesia and The Philippines which are also large markets.
Hong Kong has a 114 per cent (or so, am quoting from memory here) mobile phone penetration rate. Singapore around 104 per cent or so.
In case it seems a bit confusing as to how the percentage can go north of 100 its really simple. More and more people start owning more than one mobile handset. That's a clearly demonstarted trend.
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Rishirishi
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Replacement market is big.I am sure thats the segment that will be eyed for business once the explosive growth curve flattens.
Amit while you are right about almost 100% penetration rates in better off economies, its difficult to visualize the same possibility for India.Once you take out kids under 15 yrs of age & folks who are above 65 and Plus you factor in the BPL population, 600 million looks like the top number for India.
Amit while you are right about almost 100% penetration rates in better off economies, its difficult to visualize the same possibility for India.Once you take out kids under 15 yrs of age & folks who are above 65 and Plus you factor in the BPL population, 600 million looks like the top number for India.