Tata Motors' Acquisition of Daewoo-Case Study Essay

Words: 2404
Pages: 10

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
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It had a capacity of 20,000 unites over a two-shift operation. Most analysts felt that the DWCV acquisition was a perfect fit. Mr. Tata said, “This is a historic occasion for Tata Motors and the Tata Group. I am happy to note that this is the largest acquisition by any Indian company in Korea and I look forward to increasing the Tata Group's presence in this country. Korea is a shining example of what can be achieved with diligence and dedication, and I am sure we will learn a lot from operating in South Korea”.
The acquisition offers the opportunity for both companies to expand the product line, good research and development capabilities and new markets (which including new markets in China, Western Europe, South Africa and Latin America). As regard Tata Motor’s future, the acquisition also provide Tata Motors the opportunity to de-risk its business by countering domestic cyclicality (the CVs market is cyclical) through foreign expansion.
As I mentioned before, DWCV and Tata Motors are complementary in terms of their product range. DWCV truck ranged between 210 to 450 hp. On the other hand, Tata Motors was focused on the lower end of heavy trucks of up to 210 hp. This complementary advantage could help Tata Motors to check competition from Volvo’s Indian unit. In the word of Morgan Stanley analyst: “DWCV would help Tata Motors’ product range in its existing