global acquisitions: the india story
DESCRIPTION
Global acquisitions: the India story. Chris Parsons chairman , India practice, Herbert Smith Freehills. December 2013. India’s acquisitions overseas – 112 countries since 2003. Source: Thomson Reuters, August 2013. Target nations by number of deals (2003-13). - PowerPoint PPT PresentationTRANSCRIPT
December 2013
CHRIS PARSONSCHAIRMAN, INDIA PRACTICE, HERBERT SMITH FREEHILLS
GLOBAL ACQUISITIONS: THE INDIA STORY
2GLOBAL ACQUISITIONS | THE INDIA STORY
INDIA’S ACQUISITIONS OVERSEAS – 112 COUNTRIES SINCE 2003
Source: Thomson Reuters, August 2013
3GLOBAL ACQUISITIONS | THE INDIA STORY
US UK Australia Germany Singapore Canada Indonesia Italy France UAE South Africa
0
100
200
300
400
500
600
No.
of d
eals
TARGET NATIONSBY NUMBER OF DEALS (2003-13)
Source: Thomson Reuters, September 2013
4GLOBAL ACQUISITIONS | THE INDIA STORY
TARGET NATIONSBY VALUE (2003-13)
Source: Thomson Reuters, September 2013
US UK Nigeria Australia Venezuela Singapore Canada Bermuda Mozambique
Turkey Germany0
5000
10000
15000
20000
25000
30000
Valu
e of
dea
ls (U
S$bn
)
5GLOBAL ACQUISITIONS | THE INDIA STORY
TARGET SECTORSBY NUMBER OF DEALS (2003-13)
High Tech Mining &Materials
Consumer Industrials Healthcare Energy &Power
Financials Media & Enter-
tainment
Telecoms0
50
100
150
200
250
300
350
400
450
No.
of d
eals
Source: Thomson Reuters, September 2013
6GLOBAL ACQUISITIONS | THE INDIA STORY
TARGET SECTORSBY VALUE (2003-13)
Mining & Materials
Energy & Power
Industrials Telecoms Consumer High Tech Healthcare Media & Enter-
tainment
Financials Real Estate0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Valu
e of
dea
ls (U
S$bn
)
Source: Thomson Reuters, September 2013
7GLOBAL ACQUISITIONS | THE INDIA STORY
TOP 15 OUTBOUND CROSS-BORDER DEALS (2003-13)
Year Indian bidder Target Target sector Target’s nationValue
(US$m)
2006 Tata Steel Corus Group Metals & Mining UK 12,695
2010 Bharti Airtel Zain Africa Telecoms Nigeria 10,700
2007 Hindalco Industries Novelis Metals & Mining Canada 5,767
2010 ONGC, Repsol, Petronas, Indian Oil Carabobo Oil & Gas Venezuela 4,848
2008 ONGC Videsh Imperial Energy Oil & Gas UK 2,859
2010 Adani Enterprises Galilee Basin Coal Metals & Mining Australia 2,739
2013 ONGC Videsh & Oil India Videocon Group Oil & Gas Mozambique 2,640
2013 Apollo Tyres Cooper Tire & Rubber Automobiles & Components US 2,356
2008 Tata Motors Jaguar Land Rover Automobiles UK 2,300
2011 Adani Enterprises Abbot Point Coal Terminal Transportation & Infrastructure Australia 1,950
2010 Reliance Industries Atlas Energy – Marcellus Oil & Gas US 1,700
2008 Suzlon Energy REpower Systems Machinery Germany 1,700
2007 Essar Group Algoma Steel Metals & Mining Canada 1,467
2007 Tata Sons Kaltim Prima Coal Metals & Mining Indonesia 1,300
2011 GVK Power & Infrastructure Hancock Coal-Queensland Coal Metals & Mining Australia 1,260
Source: Thomson Reuters, September 2013
8GLOBAL ACQUISITIONS | THE INDIA STORY
A SNAPSHOT
9GLOBAL ACQUISITIONS | THE INDIA STORY
CASE STUDY ONE:TATA STEEL AND CORUS
10GLOBAL ACQUISITIONS | THE INDIA STORY
PUBLIC COMPANY TAKEOVER-OFFER
Takeover offer
(recommended or hostile)
Target company
PurchaserShareholdersTransfer shares
11GLOBAL ACQUISITIONS | THE INDIA STORY
PUBLIC COMPANY TAKEOVER-SCHEME
PurchaserShareholders
75% shareholder vote
Agreed offer
Transfer/issue of shares
Target company
12GLOBAL ACQUISITIONS | THE INDIA STORY
13GLOBAL ACQUISITIONS | THE INDIA STORY
OVERVIEW
• Acquisition of Corus Group plc by Tata Steel for US$12.6bn• Takeover effected by scheme of arrangement• Competing bid from a Brazilian steel company, Companhia Siderúrgica Nacional
(CSN) • Competition culminated in an auction on 30 January 2007• Largest ever outward investment by an India-based company• Creates the world’s fifth largest steel company
14GLOBAL ACQUISITIONS | THE INDIA STORY
TATA STEEL/CORUS TIMETABLE
Date Event5 Oct 2006 Tata Steel announces interest after media speculation20 Oct Tata Steel announces offer at 455 pence10 Nov Tata Steel posts Scheme document (documents on display)17 Nov CSN announces possible offer at 475 pence (virtual bid)4 Dec Court meeting & EGM adjourned until 20 Dec10 Dec (Sunday) Tata Steel pre-emptively increases its offer to 500 pence11 Dec CSN announces pre-conditional offer at 515 pence19 Dec Panel announces that if there is still a competitive situation on 30 Jan it
will conduct an auction30 Jan 2007 Auction started at 4.30 pm and concluded in early hours on 31 Jan
31 Jan Winning Tata offer of 608 pence and losing CSN offer of 603 pence announced
2 Apr Scheme effective date
15GLOBAL ACQUISITIONS | THE INDIA STORY
350
400
450
500
550
600
650
Sep-01
Sep-11
Sep-19
Sep-27
Oct -05
Oct-13
Oct -23
Oct-31
Nov-08
Nov-16
Nov-24
Dec-04
Dec-12
Dec-20
Jan -02
Jan -10
Jan -18
Jan-2
6
Feb-05
Feb-13
Feb-21
Mar-01
CORUS SHARE PRICE
Tata 455 offer announced
CSN 515 offer announced
CSN possible 475 offer
Tata 500 offer announced
Tata interest announced
Tata 608 and CSN 603 offers announced
2006 2007
16GLOBAL ACQUISITIONS | THE INDIA STORY
PUBLIC AUCTIONS
• The Panel announced that it would implement an auction ifCSN and Tata had not announced final offers by 30 January 2007
• The timetable was consistent with the principle that a Target should not be subject to bid speculation for an unduly long period
• The Panel has used its power to conduct auctions three times in the past.All of these have been 3-5 days long
• This is the first time the Panel has conducted an auction over such a short period (less than eight hours) and the first time that formula bids have been permitted
• Eight rounds of fixed price bidding with 5 pence minimum increments• Ninth round of formula bidding: each bidder submitted its maximum price and
differential above the highest bid of the other bidder which it was willing to pay
17GLOBAL ACQUISITIONS | THE INDIA STORY
CASE STUDY TWO:TATA MOTORS AND JAGUAR LAND ROVER
18GLOBAL ACQUISITIONS | THE INDIA STORY
COUNTRIES INVOLVED
Ford in US (Seller) Tata in India (Buyer)
Argentina Australia
Austria
Belgium
Brazil
Canada
China
France
Germany
Ireland
Italy JapanLatinAmericaMexico
MiddleEast &NorthAfrica
Netherlands
Norway
Portugal
Russia
Singapore
SouthAfrica
South Korea
Spain
Sub-Saharan Africa
Sweden
Taiwan
Thailand/rest of Asia Pacific
UK
19GLOBAL ACQUISITIONS | THE INDIA STORY
WHAT WAS THE ROLE OF AN INTERNATIONAL LAW FIRM ON THIS DEAL?
Due diligence Intellectualproperty
Employment/Trade
UnionsPensions
Drafting/negotiatingdocuments
Real Estate Projectmanagement Tax
Anti-Trust/Competition IT Dispute
resolution Environment
Finance CorporateTransitional
servicearrangements
Share schemes
20GLOBAL ACQUISITIONS | THE INDIA STORY
WAS THE DEAL A SUCCESS?
21GLOBAL ACQUISITIONS | THE INDIA STORY
CASE STUDY THREE:BHARTI AIRTEL AND ZAIN
22GLOBAL ACQUISITIONS | THE INDIA STORY
THE BHARTI STORY
23GLOBAL ACQUISITIONS | THE INDIA STORY
BHARTI’S ACQUISITION OF ZAIN AFRICA
24GLOBAL ACQUISITIONS | THE INDIA STORY
• US $10.7 billion• 15 countries across Africa• MOU – 15 February 2010• Deal signed – 31 March 2010• Deal closed – 8 June 2010
BHARTI AIRTEL/ZAIN AFRICA – THE DEAL
25GLOBAL ACQUISITIONS | THE INDIA STORY
1. Sierra Leone
2. Burkina Faso
3. Ghana
4. Niger
5. Nigeria
6. Gabon
7. Congo
8. DR Congo
9. Zambia
10. Malawi
11. Tanzania
12. Kenya
13. Uganda
14. Chad
15. Madagascar
1
2
3
4
5
6 78
9 10
11
1213
14
15
BHARTI’S ACQUISITION OF ZAIN AFRICA
26GLOBAL ACQUISITIONS | THE INDIA STORY
WORKSTREAMS
27GLOBAL ACQUISITIONS | THE INDIA STORY
MILITARY COUP
28GLOBAL ACQUISITIONS | THE INDIA STORY
PARTNERING WITH INDIA
PARTNERSHIP
29GLOBAL ACQUISITIONS | THE INDIA STORY
Bharti press release on 31 March 2010:
“This agreement is a landmark for global telecom industry and game changer for Bharti. More importantly, this transaction is a pioneering step towards South South cooperation and strengthening of ties between India and Africa. With this acquisition, Bharti Airtel will be transformed into a truly global telecom company with operations across 18 countries fulfilling our vision of building a world-class multinational” Sunil Bharti Mittal, chairman and managing director, Bharti Airtel
CLIENT’S PERSPECTIVE
30GLOBAL ACQUISITIONS | THE INDIA STORY
QUESTIONS