A load of crap from an idle brain

The world’s fastest growing telecom market, India is getting too hot and competitive for the biggest player Bharti Airtel to handle.  After its aborted attempt to buy South Africa’s MTN which fell through due to regulatory issues, Bharti is now looking in the neighbourhood for an acquisition.

In a shift of strategy, Bharti Airtel, the country’s largest telecom operator, is close to acquiring a 70% stake in Bangladesh’s fourth largest mobile operator, Warid Telecom, for close to $900 million.

The deal, likely to be sealed mid-January, comes three months after Bharti failed to secure a deal with South Africa’s MTN to become the world’s fourth largest mobile firm by subscribers.

Post-deal, management control of Warid Telecom would pass on to Bharti and Bangladeshi media reports say Bharti has submitted an investment plan of $300 million.

Bharti’s costly acquisition plan is an indication of how the stakes have risen in the telecom sector in the sub-continent; the offer is almost three times the $350 million DoCoMo paid in 2008 to buy a 30% stake in Aktel or TM International, the third ranked operator in Bangladesh.

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With signs of green shoots showing in economies worldwide, India  Inc’s appetite for overseas acquisitions got a fresh lease of life with Reliance Industries’ estimated $10-12 billion offer for a controlling interest in bankrupt LyondellBasell Industries.

The deal by India’s largest private sector company controlled by Mukesh Ambani, if closed, will make it one of the largest petrochemical outfits in the world. It will also be the second largest overseas acquisition by an Indian company, after Tata Steel bought Corus for $13 billion in 2007.

RIL has enough money power to make the deal happen. It has $4 billion in cash and $8 billion in treasury stocks, besides a favourable 0.35:1 debt-equity ratio. It also raised $660 million through treasury stocks sale recently.

In the year to October, Indian comanies acquired overseas assets worth $586 million, a sharp fall from the $13.06 billion in the same period a year ago, according to data from Grant Thornton Deal Tracker.

HSBC believes outbound activity will bounce back. About 70 per cent of HSBC’s pipeline is outbound transactions, which has remained the same as the previous year’s.

Tarun Kataria, managing director and head of corporate, investment banking and markets at HSBC, says India is sitting on the cusp of rapidly growing cross-border M&A activity.

“Indian firms are now well capitalised, are trading at circa 20x multiples, offshore markets are trading at a discount to India and financing is more readily available to Indian corporates than to competing offshore acquirers.”

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What the successor has to manage.  A 140 year old group with….

Turnover – $71 billion

Employees – 357,000

Number of companies under the group – 98

To replace – Ratan Tata

Anyone interested / capable ?

India’s Tata conglomerate is looking around the world for a successor to Ratan Tata, the 71-year old chairman of the sprawling salt-to-steel group said in an interview with the Wall Street Journal published on Wednesday.

Local and foreign candidates were being looked at to head the group, which includes Tata Motors, Tata Steel, Tata Consultancy Services and Tata Power among its 27 listed companies

“We are in the process of formalising a successor to me. We have some outside consultants and a formal search process is on. There are no constraints,” Tata, who has steered the group for nearly two decades, said in the interview.

The successor could be from within the group or outside, Tata said, adding he hoped the person would carry on the growth path that had been set. All but one of the group’s past chairmans have been Tatas, although at the moment no family candidate has been publicly identified to take over the role.

“It would certainly be easier if that candidate were an Indian national. But now that 65 percent of our revenues come from overseas, it could also be an expatriate sitting in that position with justification now,” Tata said.

The group, founded in 1868, runs India’s top vehicle maker, top software services firm, top private sector power producer and the world’s eighth-largest steel maker by output.

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Wipro, India’s No. 3 software services exporter, said on Thursday it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business.

Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets. The transaction is expected to be completed by mid-December, it said in a statement.

Lornamead’s global turnover is estimated to be close to $650 million. Its portfolio straddles various categories of personal care products including hair-care (Brisk, Aqua Net and Vosene), cosmetics and skin-care (Amplex and Handsan), oral care (Brilliant and Goldspot) and home care brand Stergene.

Tura is a significant player in soaps and skin care in Nigeria, with an annual turnover of close to $50 million.

This is Wipro’s second big buy-out in the FMCG space in two years. In July 2007, Wipro had acquired Singapore-based personal care products manufacturer Unza Holdings Ltd for $246 million (Rs 1,010.2 crore) in an all-cash deal. That deal with Unza’s portfolio of shampoos, creams, lotions and detergents had marked Wipro’s big plunge into the global FMCG space.

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The International Monetary Fund said on Monday it sold 200 tonnes of gold to the Reserve Bank of India for $6.8 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold’s rally.

While the IMF’s plan to sell some of its gold holdings had been flagged for a year before it was formally approved in September, the speed of the deal and the buyer were a surprise for traders, who had expected China — not India — to be the leading contender as Beijing diversifies its vast reserves.

The sale, which an IMF official said was concluded at an average price of about $1,045 an ounce over a two-week period in the latter half of October, will relieve the market of some of uncertainty over how and when the fund would execute its plan to sell 403.3 tonnes of gold, about one-eighth of its total stock.

“This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries,” the IMF’s managing director, Dominique Strauss-Kahn, said in a statement.

While the threat of IMF and central bank sales did not stop gold prices from soaring to a record high $1,070.40 last month, aided by a falling U.S. dollar, traders said the IMF news could add to the market’s upward momentum.

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