2 can do this deal
Indians are in play and this is not cricket I am talking about (though for those interested, India V England is on at Lord's as of now) .The game is that of global business or maybe, globalizing of business. With a spate of acquisitions in recent times, Indian businesses are expanding globally with a vengeance, as if making up for time lost before the watershed year of 1991.
It was considered natural for Pharma and IT companies to be in the hunt due to the global nature of their businesses. Traditional companies have started getting in on the act, especially in the last 2 years of the high in this boom cycle. One of the most prominent groups in India, The Tata Group, has been at the forefront of it. Almost every large Tata company has done at least 1 large deal. In the materials business, Tata Steel has done the largest acquisition out of India. In Chemicals, Tata Chem has done a few deals. In Services, Indian Hotels (The Taj) has been fairly active with a property here and another there. In Retail/Consumer sectors, Tata Tea was where it all began, giving India an aroma of a large global acquisition for the first time. In Info/Comm sectors, both TCS & VSNL are global companies in their own right. Energy, where Tata Power is the flagship is a fairly domestic business. Finally, this leaves us with the Engg Sector and Tata Motors. Has the time come? Talk about peer pressure.
The current 'game on' is Ford's putting Jaguar & Land Rover on the block. Several and several types of players have been reported to be interested. This includes the usual suspects of pvt equity players, there have been recent prcedents - notably the Chrysler Deal. Soon, Indian names may also be added to usual suspects list in global deals. The names, Tata and Mahindra have been mentioned. (http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tnBusinessNews&storyID=2007-07-19T055613Z_01_BOM5680_RTRIDST_0_BUSINESS-TATA-FORD-DC.XML) A similar story could be with Chinese marquees which have global ambitions of their own in the automotive sector. Hyundai has also been mentioned but a spokesman denied interest. (http://www.forbes.com/feeds/ap/2007/07/18/ap3926832.html)
As an aside, when I was working as a management consultant, my friends in the Garage (Automotive practice) had created one of those notorius consulting charts showing how the number of automotive groups had declined from a very large no. (was it 50) to about 12 over the decades. That was 2004, and now I see a reversal of this process happening to some extent. DaimlerChrysler would become 2 from 1, GM has had to untangle several holdings, most notably Fiat. And now Ford has started selling.
So, does it make sense for Tata Motors (TM) or Mahindra (M&M)? Tata Motors could be interested in Jaguar to gain access more to product refinement, advanced auto technologies, safety standards applicable in developed markets, a brand identity and maybe, distribution channels. But Tata Motors has a Fiat tie-up which may have been for some of these very things.
M&M may be more interested in the Rover side as it already has global SUV ambitions and has tasted success with its very own Scorpio. Time to move one step ahead?
Valuation ranges mentioned for Jag-Rover have been $1.3-$8bn due to lack of detailed financial info. Indian analysts believe it to be closer to the lower end. Considering that a substantial no. of players may be interested - PE, Indian, Chinese, otheres - could the bidding get intensive?
Maybe, TM & M&M should sit together over this one, give it a shot and divide the winning spoils(Jag to TM, Rover to M&M) once its in the bag. Handling their respective partners Fiat and Renault-Nissan is another matter though as the latter may get interested itself.
It was considered natural for Pharma and IT companies to be in the hunt due to the global nature of their businesses. Traditional companies have started getting in on the act, especially in the last 2 years of the high in this boom cycle. One of the most prominent groups in India, The Tata Group, has been at the forefront of it. Almost every large Tata company has done at least 1 large deal. In the materials business, Tata Steel has done the largest acquisition out of India. In Chemicals, Tata Chem has done a few deals. In Services, Indian Hotels (The Taj) has been fairly active with a property here and another there. In Retail/Consumer sectors, Tata Tea was where it all began, giving India an aroma of a large global acquisition for the first time. In Info/Comm sectors, both TCS & VSNL are global companies in their own right. Energy, where Tata Power is the flagship is a fairly domestic business. Finally, this leaves us with the Engg Sector and Tata Motors. Has the time come? Talk about peer pressure.
The current 'game on' is Ford's putting Jaguar & Land Rover on the block. Several and several types of players have been reported to be interested. This includes the usual suspects of pvt equity players, there have been recent prcedents - notably the Chrysler Deal. Soon, Indian names may also be added to usual suspects list in global deals. The names, Tata and Mahindra have been mentioned. (http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tnBusinessNews&storyID=2007-07-19T055613Z_01_BOM5680_RTRIDST_0_BUSINESS-TATA-FORD-DC.XML) A similar story could be with Chinese marquees which have global ambitions of their own in the automotive sector. Hyundai has also been mentioned but a spokesman denied interest. (http://www.forbes.com/feeds/ap/2007/07/18/ap3926832.html)
As an aside, when I was working as a management consultant, my friends in the Garage (Automotive practice) had created one of those notorius consulting charts showing how the number of automotive groups had declined from a very large no. (was it 50) to about 12 over the decades. That was 2004, and now I see a reversal of this process happening to some extent. DaimlerChrysler would become 2 from 1, GM has had to untangle several holdings, most notably Fiat. And now Ford has started selling.
So, does it make sense for Tata Motors (TM) or Mahindra (M&M)? Tata Motors could be interested in Jaguar to gain access more to product refinement, advanced auto technologies, safety standards applicable in developed markets, a brand identity and maybe, distribution channels. But Tata Motors has a Fiat tie-up which may have been for some of these very things.
M&M may be more interested in the Rover side as it already has global SUV ambitions and has tasted success with its very own Scorpio. Time to move one step ahead?
Valuation ranges mentioned for Jag-Rover have been $1.3-$8bn due to lack of detailed financial info. Indian analysts believe it to be closer to the lower end. Considering that a substantial no. of players may be interested - PE, Indian, Chinese, otheres - could the bidding get intensive?
Maybe, TM & M&M should sit together over this one, give it a shot and divide the winning spoils(Jag to TM, Rover to M&M) once its in the bag. Handling their respective partners Fiat and Renault-Nissan is another matter though as the latter may get interested itself.
posted by Amit at 2:30 PM
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