Tata #4: Mega-Acquisitions in the West

When Tata Steel tried to acquire the British steel giant, Corus, they didn’t expect a bidding war to start. But it did, with the entry of CSN from Brazil, says Shashank Shah in The Tata Group. The British panel on acquisitions and mergers didn’t want an endless bidding war to happen, so they declared “a nine-round bidding process”.

 

During the bidding process, the bidding CEO’s were in their respective countries while their lawyers were in England to submit the bids. Communication happened over the phone. Amusingly:

“On two occasions, they (Ratan Tata and his lawyer) even changed phone numbers to ensure total secrecy.”

 

Tata Steel won eventually and acquired Corus.

“Nearly a century ago, Jamsetji Tata had requested Lord George Hamilton, then Secretary of State in British India, for the government’s cooperation in starting India’s first steelworks. A 100 years later, in the centennial year of Tata Steel, it acquired one of the largest steel companies in England.”

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With the launch of Indica, Tata Motors entered the personal vehicle market. Once the hype had died down, complaints started pouring in. Some were mistakes in the design, others were traced to bought-out parts. The Tata brand, associated with high quality, was taking a beating.

 

At this point, Ford showed interest in buying the car business. But the trip to Detroit was humiliating. Or maybe it was a negotiation tactic by Ford:

“Why did you start the passenger car division at all when you do not know anything? We will do you a favour by buying your car division.”

Ratan Tata stormed out.

 

In 2007, Ford announced its plan to sell off its prestigious brands – Jaguar and Land Rover (JLR). Tata Motors was interested – building a market in the West for an Indian company was going to be very hard; buying seemed a better option. The 1 lakh rupee car company had bought the top luxury brands! Though Ratan Tata never said so, it must have felt sweet to turn the tables.

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Indian newspapers had a field day with such acquisitions. “The Empire Strikes Back”. “Jaguar is now an Indian Beast”. “Tatas Rule Britannia”.

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Those may have been juicy soundbites and catchy headlines, but as Shah writes:

“The Tatas effectively projected an image of a professionally run conglomerate, independent of nationalistic overtones. The group ran acquired companies on sound principles rather than prejudiced patriotism.”