India Inc on 'Mission Acquisition' in 2006
Indian entrepreneurs broke open their war chests and moved in for the kill in 2006, but the attacks were sometimes successful like NRI steel tycoon L N Mittal's takeover of Arcelor and at other times followed by reprisals -- CSN's surprise counter...
By PTI |
NEW DELHI: Indian entrepreneurs broke open their war chests and moved in for the kill in 2006, but the attacks were sometimes successful like NRI steel tycoon L N Mittal's takeover of Arcelor and at other times followed by reprisals -- CSN's surprise counter to Tata's bid for Uk-based steel major Corus.
The year also saw bickering between the Tatas and Birlas, two of the oldest and most respected corporate houses in India, over cellular venture 'Idea', but the public spats were much less noisy than those of the previous year.
But the Tatas grabbed headlines all through the year for one reason or the other, which being their small car project at Singur in West Bengal, that saw a sea of protest by political parties to acquisition of land for the plant. Only 60 per cent of the land required by Tatas has been acquired so far and the matter would spill over into the new year.
Also to be decided in 2007 is Tatas 4.7 billion pounds bid for Anglo-Dutch steel company Corus, with the UK Takeover Panel giving the Indian corporate and rival Brazilian suitor CSN time until January 30 to revise their bids or it will decide the winner through an auction.
Tata Steel had in October made a bid of 455 pence a share for Corus, a company much bigger in size than itself. But just when the Tatas seemed to be heading home victorious with the offer, to create the world's fifth-largest steel group from Tata Steel's 56th position, came the shocker in the form of a rival bid from CSN that valued the Anglo-Dutch company at 475 pence a share.
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The two suitors have since revised their bids, but who gets Corus is just a matter of time. But if through, this would be the largest takeover by an Indian firm abroad. But the cream of deals engineered by an India-born entrepreneur was that of NRI steel baron L N Mittal buying out Arcelor.The proposal to buyout Arcelor came up as as a wild idea from Mittal's son Aditya after Mittal Steel lost a bidding war for Canadian steel maker Dofasco to the Luxembourg-based steel manufacturer. But the Arcelor-Mittal battle went on to become one of the most keenly-followed corporate battles across the globe as the India-born Mittal fought for five gruelling months before gulping down Arcelor for a whopping $32.5 billion.
Mittal's battle, and the ultimate victory, personified the spirit of entrepreneurship of Indians, who did not shirk challenges that others would normally have.
CSN's interest saw the Tatas revise their offer to 500 pence per share, which was followed by an even higher 515 pence offer by the Brazilian steel firm. The takeover battle will be decided in the new year, but nevertheless portrays the fact that Indian coprorates are not shy of bidding for companies much larger than themselves.
Another takeover battle started toward the end of the year. This time, it was for Indian GSM mobile giant Hutchison-Essar. Hutchison Telecom International Ltd's decision to sell off its stake in the telecom JV literally led to a scramble, with interest not only from JV partners Ruias but from Anil Ambani's Reliance Communications as well as global telecom giant Vodafone.
HTIL's 67 per cent stake in the venture is estimated to be valued at around a whopping 16-18 billion dollars. While Hutch-Essar could be clubbed as a domestic deal, India Inc spent a whopping 29 billion dollars in outbound mergers and acquisitions in 2006 through 147 deals, according to global financial information provider Dealogic.
If aggression can be taken as a yard stick for performance, then retail was the sector which saw the most of it. Corporate giant Reliance Industries unveiled a Rs 25,000 crore plan for its foray in the retail sector, aiming to set foot in 1,500 towns and cities across India and offer a variety of products and services, ranging from food and grocery to health and education.
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"Organised retailing will be the overarching theme of the expansion and growth of Reliance in the near-term future," Reliance industries chairman Mukesh Ambani told shareholders at the company's 32nd AGM in June, outlining the "next big idea" for the group.
But Reliance soon realised that it was not the only one to bet big on the retail sector. Telecom czar Sunil Mittal, credited with starting a mobile revolution in the country, late in the year tied up with Wal-Mart, one of the world's biggest retailers, famous for its highly aggressive posturing.
As per the arrangement between the two companies, Bharti would manage the front-end of the business, while Wal-Mart would take care of the supply chain, logistics and other back-end operations. This was done primarily keeping in mind the restrictions on FDI in multi-brand segment.
Other big groups bitten by the retail bug in the country include the Birlas as well as Tatas, as they also announced plans to firm up position in the segment. HTIL's 67 per cent stake in the venture is estimated to be valued at around a whopping $16-18 billion.
While Hutch-Essar could be clubbed as a domestic deal, India Inc spent a whopping $29 billion in outbound mergers and acquisitions in 2006 through 147 deals, according to global financial information provider Dealogic.
If aggression can be taken as a yard stick for performance, then retail was the sector which saw the most of it. Corporate giant Reliance Industries unveiled a Rs 25,000 crore plan for its foray in the retail sector, aiming to set foot in 1,500 towns and cities across India and offer a variety of products and services, ranging from food and grocery to health and education.
"Organised retailing will be the overarching theme of the expansion and growth of Reliance in the near-term future," Reliance industries chairman Mukesh Ambani told shareholders at the company's 32nd AGM in June, outlining the "next big idea" for the group.
But Reliance soon realised that it was not the only one to bet big on the retail sector. Telecom czar Sunil Mittal, credited with starting a mobile revolution in the country, late in the year tied up with Wal-Mart, one of the world's biggest retailers, famous for its highly aggressive posturing.
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As per the arrangement between the two companies, Bharti would manage the front-end of the business, while Wal-Mart would take care of the supply chain, logistics and other back-end operations. This was done primarily keeping in mind the restrictions on FDI in multi-brand segment.
Other big groups bitten by the retail bug in the country include the Birlas as well as Tatas, as they also announced plans to firm up position in the segment. But expansion was not the sole buzz word. Corporate bickering, or battles, were also there in plenty. The country's oldest corporate houses, Tatas and Birlas, had a spat over GSM operator Idea Cellular.
After public wranglings, the issue was finally resolved when Tatas (who also run mobile services under CDMA) agreed to exit, selling their 48.12 per cent stake in Idea to the Birlas for Rs 4,406 crore.
Another spat that was in news was between joint venture partners Britannia and French foods major Groupe Danone. Thetrouble started when Britannia, maker of Tiger and Pure Magic biscuits, refrained from sharing its results with Danone, citing corporate governance issues.
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More an intellectual property rights (IPR) issue, Britannia was not happy with Danone registering its 'Tiger' brand in over 70 countries. And as if on-gound trouble was not enough, there was trouble in the skies as well, with the failure of the Rs 2,300 crore deal of Jet Airways to buyout Air Sahara. It was a dramatic turn of events as Jet Airways, a listed company backed out hours before the end of the deadline.
Predictably, the matter ended in courts, both companies fighting over the money that Jet had deposited in the escrow account. A similar flip-flop happened in Videocon's ambitious acquisition plans for Korea's Daewoo Electronics, initaiily agreed at $750 million. Just as the year drew to a close, reports surfaced that the acquisition was in troubled waters, with the creditors of Daewoo not agreeing to a proposal to reduce the acquisition cost.
And not only acquisitions, but plans for new plants also seemed to court trouble. Tatas plan to roll-out its ambitious Rs one lakh car from Singur in West Bengal virtually came to a standstill with Mamata Banerjee, a major political force in the state, going on a hunger strike against the project. And even though she has ended a 25-day fast, the project still remains a non-starter as her objection to the plant at Singur stays.
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