Global acqusitions

I am no great financial analyst to comment on the recent spate of global take overs by Indian companies of Global giants ( Namley Tata-Corus, Hindalco - Novelis ) and even the small buyouts by a whole host other listed entities but couple of things surely come to mind is first the acquisitions have happened when asset prices are at the highest be it stocks, reality and even bond yields so there is an element of speculative bubble built into the acquisition price. In case of Tata Corus which went through the auction the price was definitely higher than what Ratan Tata would have liked to pay. Secondly most of the acquisitions are 100% cash( stock swaps are impossible ) being mostly funded through debt - with the interest rates rising there is bound to be pressure on the acquirers to justify the prize catches to the shareholders and lenders. With the asset expansion cycle in its fifth year there is bounds to be doubts on how long the rally going to last. A lot of these acquisitions are of companies in various commodities which definitely have their business cycles and again most of the are going through their peaks ( though the take on each case can be different)

Contrast this with how LN Mittal built his empire - acquiring companies down in the dumps and at very cheap valuations which gave him the leverage years later to mount a takeover of Arcelor which was still cheaper than corus plus it was not 100% cash deal as the other Indian deals. Where does this leave us ? Only hope that the synergies as the managements have doled out come faster and they dont get bogged down by integration pains.

Incidentally today's pink papers carry couple of stories in detail.

Economic times - Investors guide
Business - Standard - Smart Investor