Havells India: the Sylvania Acquistion Decision

1. Havells’ proposed acquisition of Sylvania Limited Inc. (SLI) makes sense from a strategic point of view. Macroeconomic conditions and an increasing threat of competition give merit as to why this proposed acquisition makes strategic sense. The electrical and lighting industry is poised for a major growth spurt (page 3), and this could pan out to be a lucrative time for companies such as Havells to begin investing in both these segments. Havells has become a dominant player in the switchgear market (page 4), and it has smaller positions in the cable and wire (C&W) and electrical consumer durables (ECD) industries, both of which faced stiff competition. Even though, Havells has a good footing in their Indian domestic market, competition is now increasing due to globalization and governmental policy changes. The liberalization policy of the Indian government has brought new international entrants into the Indian market increasing domestic competition.

Havells needs to plan for an acquisition to diversify their operations geographically and through their product offerings. SLI, whose primary operations are in Europe and Latin America, would provide this geographic diversification. For SLI, as their competitive landscape increased, their management is also looking expanding its geographic reach. As well, Havells’ business is predominantly in electrical control gears with a small presence in lighting. The acquisition of SLI, whose product offering is primarily in lighting and lighting fixtures will give provide Havells product diversification. As Havells currently has a small presence in lighting, the acquisition of SLI could bear fruit to positive synergies if these operations are combined successfully. SLI’s wide marketing network is perceived as a good channel for marketing Havells’ products in Europe (page 8). Combining the two companies R&D knowledge could bolster innovative products for both segments. These possibilities of synergy and the need for