TRENDS THE SURGING TSUNAMI - MERGERS & ACQUISITIONS STORY… 28 Need the Dough July-October 2007
MERGERS & ACQUISITIONS <strong>The</strong> restructuring exercise is carried out to gain optimum utilization of resources and re-focus on the objectives and changed business dynamics Breaking News: ● Havells India acquires SLI Sylvania, Germany – deal size US $ 300 mn ● Suprajit Engg buys out CTP Gills Cable of UK – deal cost US $ 5 mn ● Batliboi Ltd acquires Quickmill Inc in Canada – worth INR 22 crores and buys AESA of France – deal size INR 9 crores ● Tata Steel outbid their South American rival for Corus – deal size US $ 12.1 bn ● Karuturi Networks acquires Sher Agencies , a Dutch outfit – cost US $ 69 mn ● Suzlon successfully bids to buyout REpower in the wind energy segment – deal size $ 1.35 bn ● Wipro acquires the healthcare providers of S.E. Asia to gain geographies and enhance their health and personal care product range. ● Wipro Technologies acquires Infocrossing of US in a all cash deal of US $ 600 mn ● JSW Steels India buys Steel Saw Pipes, USA, Jindal United Steel Corp., US & Jindal Enterprises LLC USA totaling a whopping US $ 940 mn / INR 3845 crores A typical though small sampler of headlines making it to the daily newspapers in the first half of the year 2007 --- Headlines such as these have become an everyday feature and inevitable too. To comprehend the reasons pertaining to such frequency in the world of mergers and acquisition , if we peel off the layer of hectic activity and biddings, dealings <strong>going</strong> on, the causes and the underlying matter attracting such deals and sustaining this rapidly ballooning phenomenon can be seen to be fundamentals emerging from the economic structure. <strong>The</strong> present multi-hued conglomerations, mega deals are all seen to be happening on the strength and structure of the developing thriving economy and in turn is also facilitated by the liberalization policies and growing economy. Quite a case of success breeding success, if one could say so. Growth <strong>The</strong>me: <strong>The</strong> dominant theme for India Inc`s M & A outreaches is simply this: Growth. Catch up with the biggies out there as quickly as possible. ● Growth – Evolve, Empower Being in a phase of economic transition, introspecting, exploring the unfolding opportunities, investing for a bigger and better profitable tomorrow helps in evolution and empowerment of the business ● Growth – Uniqueness, Innovation <strong>The</strong> present day business dynamics ensure growth only and if only there is enough preparedness, innovation, thinking processes devoted to creating uniqueness of products and services ● Growth – Value addition, Differentiation <strong>The</strong> businesses of today have to compete in open environs to be able to gain and retain interest and attract brand loyalty and trust in preference to other products in the range which can only be secured with differentiation and value addition. ● Growth – Vision, Mission <strong>The</strong> growth on the basis of planned out investments leads to a higher plane of vision, the scale of operations perceptibly richer and varied with the mission also rolling on to newer domains, intact and fully compatible with commercial interests. This Growth to happen in a defined period of time and space, to realize all these dramatically resultant significant energies need the added impetus given by M & A activities, (inevitably incremental fund flows too!) as the internal accrual method of gaining strength is definitely a slower, slightly restrictive process though very much in the realm of possibilities. Just as a specialist sportsperson needs general fitness and agility before training in the special features of the game, so do the economy, industry and firm need to be basically fit before attempting to gain speed and competitiveness in a specialist zone. A cursory glance at the basic sectoral array of the firms confirm the view that the proactive expansion growth plans are happening across the board – from engineering, Information Technology, by Mr. ITES Jangoo to healthcare, Dalal power and infrastructure to even Sr. VP-Enterprise, horticulture firms Cisco Systems – with no (India & SAARC) sector lagging behind. Deal sizes range from a hefty US $ 1 billion and more, as in the case of Tatas to as tiny as US $ 2/3 millions and gauging which the size gradation ranges from neo corporates, niche players in their selected segments to July-October 2007 Need the Dough 29
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