Corus buy breaks the jinx on global deals

NEW DELHI: India Inc has finally broken the jinx, with the Tata-Corus deal. In the past two years, more than five Indian companies have chased big global deals only to lose out at the last minute.

For instance, in 2005, hunter Purnendu Chatterjee set his eyes on Basell, the world���s largest producer of polypropylene and advanced polyolefins and a joint venture between BASF and Royal Dutch Shell.

The Chatterjee Group (TCG) and Haldia Petrochemicals, along with a group of international investors, entered the bidding process and also emerged as the front-runner. However, the deal was finally snapped by Access Industries, a privately-held New York-based industrial holding company founded by Ukrainian born Len Blavatnik.

The $5.4-billion deal was the largest leveraged buyout in the industry at that time. The West Bengal government, one of the stakeholders of Haldia Petrochemicals, had then stated that the Basell acquisition was not its priority.

Then, there was Vijay Mallya���s bid for French champagne major Taittinger. There, the company���s workers council voted against UB group���s bid, even though at $660 million, it was said to be higher than that of Starwood Capital which finally walked away with the deal. UB finally managed to get a part of the group by acquiring Bouvet-Ladubay, the wine arm of Taittinger.

Says Pankaj Karna, head (M&A) at advisory firm Grant Thornton: ���When companies get into high-profile acquisitions, a lot depends on how you back up the deal process. Besides, factors like how much you can cough up, experience in closing cross-border deals also make a difference.���

Adds an advisor who���s been involved in one such unsuccessful deal, ���When stakes go high, one should not lose nerves. There are times when a promoter of the company may snap at the last moment of the bidding process.���

The two recent cases where price became a big issue include Videocon group���s bid for South Korean electronics major Daewoo Electronics and UB���s bid for scotch giant Whyte & Mackay. In fact, for Daewoo Electronics, the Dhoots of Videocon were even selected as the preferred bidder and were said to be only days away from sealing the deal.

But it all came crashing down last month. After due diligence, the Videocon group-led consortium asked for a 15% cut in their original acquisition price of $730 million. This was rejected by the lenders of Daewoo Electronics, who hold 97.5% stake in the company.

Similarly, UB group���s bid for Whyte & Mackay is also said to be in a pricing turmoil. The UK company is believed to be pitching for a sum which is about 15% higher than what the UB group is willing to pay.

Says chairman of a $2-billion Indian business house: ���Expectations of foreign sellers have increased after they saw Indian companies turning around loss-making global operations. They are asking for higher valuations for all deals as they know Indian companies would go all out to acquire good assets.���

vivek.sinha@timesgroup.com