The Hindu Business Line : Europe emerges favourite for auto, pharma acquisitions

INDIA Inc is fast gaining a reputation as a global corporate raider. And domestic companies seem to have clearly identified their favourite hunting grounds.

A look at major acquisitions by Indian corporates over the past two years shows the automobile and pharmaceutical sectors choosing companies in Europe for takeovers, while the metals and minerals segment has targeted firms in the Asia-Pacific region. However, the US seems to find favour with information technology, telecom and IT-enabled services (ITES) firms.

A look at the automotive sector first. Out of the four major overseas acquisitions over the past two years, three deals took place in Europe, with Tata Motors' acquisition of the commercial vehicles business of Daewoo Motors in Korea being the exception.

In fact, all the takeovers by the auto component companies took place in Europe. Amtek Auto took over GWK of the UK, Sundram Fasteners Dana Spicer of UK and Bharat Forge took over CDP GmBH of Germany.

"As more Indian auto component companies achieve higher scale, there would be an increased trend of inking acquisitions in the European region as it gives access to a ready and global client base," points out a market watcher.

In fact, the trend will only go forward with two major Indian auto component firms - Rico Auto and Omax Autos - currently scouting for acquisitions in the same region.

Similarly, in the pharmaceuticals sector, seven out of the 10 major acquisitions during the last two years happened in Europe. Big-ticket purchases in Europe included Ranbaxy's buyout of RPG Aventis, Wockhardt acquiring CP Pharma of UK and Esparma of Germany, Jubilant Organosys PSI Group of Belgium, Zydus Cadila taking over Al Pharma of France and Dabur Pharma Redrock of the UK.

The notable exceptions to the trend were acquisitions by Sun Pharma and Dr Reddy's in the US, and by Glenmark in Brazil. "Acquisitions of small and mid-sized foreign companies provides Indian pharma majors proximity to regulated markets such as the US and Europe and provides them an opportunity to get higher margins," an analyst said.

Analysts agree that India Inc is increasingly taking the acquisitions route to strengthen its global operations and gain a foothold in high-margin markets. While Indian companies spent only $209 million in 2002 for overseas acquisitions, the figure in 2003 shot up to around $1.8 billion, according to data compiled by India Advisory Partners.

And already, during the first six months of the current year, 24 overseas acquisition deals worth $800 million have been inked.

More Stories on : Corporate | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Banks lend farmers a hand to escape moneylenders' clutches

Europe emerges favourite for auto, pharma acquisitions

Shipping lines exempt from bank guarantees

Over 400 stocks touch all-time high on BSE

Ownership norm: Existing pvt banks may get a breather
Ministry for applicability on prospective basis

BSNL-Reliance Info spat has a security angle too