Tata Motors' Acquisition of Daewoo-Case Study
Introduction:
Over the past three to four years, overseas acquisitions by Indian firms have increased in terms of number and average deal size. According to UBS Investment Research Report 2007, they believe this is a consequence of Indian corporate' strong balance sheets and rising global ambitions. In this essay I am going to use a specific acquisition example based on the article named “Tata Motors’ Acquisition of Daewoo Commercial Vehicles” to illustrate the Indian Acquisition problem. Statistically, there are 12 per cent to 14 per cent of Tata Motors’ revenue is from overseas at current status. And Tata Motors sets its communicated target at 25 per cent to 30 per cent, which means that the company aims to reach 25%-30% revenue from overseas in three years, eventually wants to build a global automotive brand. (UBS Investment Research, 2007)
The article is about the first-ever overseas acquisition by an Indian automobile company. It provides a detailed account of the acquisition of Daewoo Commercial Vehicle Company Limited (DWCV) in South Korea plant by Tata Motors, which was a part of the Tata Group and the world’s sixth largest commercial vehicle manufacturer. On 29th of March, 2004 Tata Motors Limited, India, announced, today, that it had completed the acquisition of Daewoo Commercial Vehicle Company Limited (DWCV), Korea. The Chairman of Tata Motors, named Ratan Tata pointed out: “This is indeed a major step for Tata Motors and a milestone for the group in its quest for globalization. I am confident that both companies will derive considerable benefits from this agreement.”
I am going to structure my essay by answering the following question: What was the strategic and economic rationale for the acquisition in the case? What strengths of Daewoo Motors were the most valuable for Tata Motors? What were the major challenges for Tata Motors in this acquisition? What were the major potential synergies from the deal? And were they realized?
Strategic and
Over the past three to four years, overseas acquisitions by Indian firms have increased in terms of number and average deal size. According to UBS Investment Research Report 2007, they believe this is a consequence of Indian corporate' strong balance sheets and rising global ambitions. In this essay I am going to use a specific acquisition example based on the article named “Tata Motors’ Acquisition of Daewoo Commercial Vehicles” to illustrate the Indian Acquisition problem. Statistically, there are 12 per cent to 14 per cent of Tata Motors’ revenue is from overseas at current status. And Tata Motors sets its communicated target at 25 per cent to 30 per cent, which means that the company aims to reach 25%-30% revenue from overseas in three years, eventually wants to build a global automotive brand. (UBS Investment Research, 2007)
The article is about the first-ever overseas acquisition by an Indian automobile company. It provides a detailed account of the acquisition of Daewoo Commercial Vehicle Company Limited (DWCV) in South Korea plant by Tata Motors, which was a part of the Tata Group and the world’s sixth largest commercial vehicle manufacturer. On 29th of March, 2004 Tata Motors Limited, India, announced, today, that it had completed the acquisition of Daewoo Commercial Vehicle Company Limited (DWCV), Korea. The Chairman of Tata Motors, named Ratan Tata pointed out: “This is indeed a major step for Tata Motors and a milestone for the group in its quest for globalization. I am confident that both companies will derive considerable benefits from this agreement.”
I am going to structure my essay by answering the following question: What was the strategic and economic rationale for the acquisition in the case? What strengths of Daewoo Motors were the most valuable for Tata Motors? What were the major challenges for Tata Motors in this acquisition? What were the major potential synergies from the deal? And were they realized?
Strategic and
References: - Ruchi Chaturvedi N, under direction of Sanjib Dutta, Reference number 305-168-1, Case Study, Tata Motors’ Acquisition of Daewoo Commercial Vehicles, ICFAI Center for Management Research, 2005 - Manishi Raychaudhuri, Sanjay Mathur and Sonal Gupta, UBS, UBS Investment Research, Indian Strategy, 2007