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Europe is top target for acquisitions by Indian Cos

Written by: Staff

New Delhi, Oct 23: Indian companies will spend more than 10 billion dollars on acquisitions in Europe this year, accounting for almost 90 per cent of the total overseas purchases, an industry chamber said here today.

According to IndusView Advisors Private Ltd, the acquisition of the UK's top steel maker Corus Group Plc by India's Tata Steel Ltd for eight billion dollars adds to the 2.68 billion dollars spent by Indian firms during the first half of 2006 on 32 acquisitions of European firms.

It does not include the 38 billion dollars of Arcelor SA by Mittal Steel Co, as the latter is not India-based.

''The Tata-Corus deal is a shot in the arm in the globalisation of Indian firms'', said Bundeep Singh Rangar, Chairman of IndusView, the India-focused cross-border advisory firm.

''Europe's multilingual, multicultural and fragmented market place means that Indian companies must buy their way into the European market''.

''The single market and common language make the US market accessible to Indian companies. Familiarity with Asian culture make nearby Asian markets much more conducive for business'', said Mr Rangar.

He said Europe's diversity makes it a tougher market to crack by organic growth alone.

Mergers and acquisitions worth 10.8 billion dollars involved the Indian companies during the first six months of 2006. These included four billion dollars spent by Indian companies on 85 overseas acquisitions.

Two thirds of money was spent on buying European firms. On the flip side, foreign companies bought 34 Indian firms worth 3.4 billion dollars.

The UK remained the top destination for acquisitions by Indian companies. India also became the third largest investor in the UK as Indian companies invested about two billion dollars in the UK financial year to March 2006, more than twice the previous year.

India's Tata Group with revenue of 22 billion dollars and equivalent to about 2.8 per cent of the country's GDP, leads the M&A league table with its acquisition of Corus Group Plc.

The Tata Group had previously acquired the UK-based Tetley Group in February 2000, then the world's largest manufacturer of tea, for 407 million dollars at that time.

The Corus acquisition will be India's largest-ever global acquisition that will make Tata Steel the world's fifth largest steel producer with a capacity of about 26 million tons and combined sales of 24.4 billion dollars.

''It gives Tata's the size and scale to be globally competitive in a consolidating steel industry'', said Mr Rangar.

Tata Steel had bought Singapore's Natsteel Ltd in August 2004 for 287 million dollars and Thailand's Millennium Steel Pcl for 400 million dollars in December 2005.


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