Mumbai12 minutes agoAuthor: Sachin P Mampatta
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Bharti Enterprises has recently announced to buy 24.5% stake in British telecom company BT. This deal is worth Rs 35 thousand crores. The special thing is that big acquisitions of Indian companies abroad are proving to be profitable deals.
An examination of large overseas acquisition deals by Indian companies shows that despite rapid growth in the Indian economy, their penetration in overseas markets has increased by 1.6 to 17.6% compared to the domestic market.
The analysis covered the top 5 foreign acquisition deals since 2000; deals involving multiple investor groups were not included in the analysis.
Growth of companies increased after acquiring foreign companies
- Tata Steel acquired Corus Group for $12.7 billion in 2007-08. After this deal, Tata Steel’s domestic business grew at a rate of 13.2% annually. Whereas, the company’s foreign business grew at a rate of 14.8%.
- Bharti Airtel acquired Zain Africa for $10.7 billion in FY11. The company’s overseas revenue grew 24.7% year-on-year but domestic business grew 7.1%.
- Hindalco Industries acquired US company Novelis for $5.8 billion in FY 2008. Revenue from the overseas wing grew at 19%, double that of the domestic business. Novelis is projected to account for 60% of Hindalco’s revenue in 2024.
- Agricultural chemicals company UPL acquired Arista Lifesciences for $4.2 billion in 2019. Its overseas revenue grew 17.7%, while revenue from the domestic business grew only 8.8%.
- Tata Motors acquired Jaguar Land Rover from Ford Motor Company for $2.3 billion. Its overseas revenue grew 13.8%, but domestic revenue grew 11.2%.
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