Indian companies continued their acquisition spree in 2007 also with nearly 210 M&A deals reported. At this pace, the M&A numbers may touch 400 by the year 2010. India is now among the world's most competitive producer of steel, auto component, pharmaceuticals, chemicals offering low-cost high value products, and the future merger & acquisition (M&A) activities between India and Europe would concentrate around them. Cross-border deals by Indian firms during the year are expected to be in the region of $35 billion, compared with $15 billion in 2006 and $4.3 billion in 2005.
This year, amongst the biggest overseas buys by an Indian company was the acquisition of Anglo-Dutch company Corus for $12.2 billion by Tata Steel. The deal is likely to catapult the combined entity to among the world's largest steel companies with a total capacity of about 24 million tonnes per year. The Tate Steel-Corus deal would be at No. 5 among the top deals witnessed by the global steel industry over the last couple of years. The highest rank goes to Arcelor-Mittal Steel deal of $32 billion followed by the NKK Corp-Kawasaki Steel deal of $14.1 billion.
Hindalco’s acquisition of Canadian company Novelis Inc for $ 5.9 billion is also one of the biggest overseas acquisitions by an Indian company. Hindalco is Aditya Birla Group’s flagship company. The all-cash transaction has made Novelis, Hindalco’s subsidiary. This transaction also makes Hindalco the world's largest aluminium rolled products company. The acquisition bodes well for both the entities. Novelis, processes primary aluminium to sell downstream high value added products. This is exactly what Hindalco manufactures. This makes it a marriage made in heaven.
Suzlon Energy acquired German wind turbine maker REpower for $1.7 billion. Suzlon has taken controlling stake in the company. French company Martifer already holds a 25 per cent stake in REpower. Suzlon has the call option to acquire the 25 per cent stake that Martifer holds at a later date. Similar to Suzlon, REpower is exclusively focussed on the wind power business, but the two were not competitors. REpower’s growth plans fitted into Suzlon’s expansion plans for the near future.
Vijay Mallya's United Spirits bought out the Scotch major Whyte & Mackay for $1.11 billion, which includes a payout to bridge a pension fund deficit in W&M's Pension Trust. Whyte & Mackay has an array of brands including their USP W&M Scotch Whisky, Dalmore Scotch Whisky ,Isle Jura Single Malt and Vladivar Vodka. United spirits will look to promote these products in India and several markets overseas.
Essar Global Limited, through its wholly owned subsidiary Essar Steel Holdings Limited, acquired majority stake in Canadian company Algoma Steel Inc for an amount aggregating $1.74 billion. This acquisition fits in with Essar’s global steel vision. Algoma provides an excellent platform for the Canadian and North American markets. The Canadian company’s revenues are derived primarily from the manufacture and sale of rolled steel products including hot and cold rolled steel and plate. Essar Steel already operates a cold rolling complex in Indonesia and has now finalized plans to setup an integrated steel plant for flat products in Trinidad and Tobago and a hot strip mill in Vietnam.
Acquisitions by Indian pharmaceutical companies have also taken centre stage this year. Ranbaxy Laboratories has acquired Be-Tabs, the South African pharma major for a whopping $70 million. This will make the company the fifth largest generic pharmaceutical company in South Africa. In March, Glenmark Pharmaceuticals acquired 90 per cent stake in Medicamenta, a pharma marketer and manufacturer in Czech Republic for an undisclosed amount. Wockhardt bought out Negma Laboratories of France for $265 million in May. In June 2007, Zydus Cadila acquired a privately owned mid-sized Brazilian company, Nikkho, for $26 million. In July, Elder Pharmaceuticals acquired 20 per cent stake in the Neutra Health of UK for £5.63 million.
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