The global acquisitions of the Tata group have been the defining feature of Ratan Tata’s tenure at the top. Be it the acquisition of Corus Steel or Jaguar Land Rover or the Tetley group, the size of the deals and the sheer audacity of an Indian company making a bid for these global marquee brands had the world sitting up and taking notice.

It was in the second decade under Ratan Tata’s leadership that he gave the clarion call to the group to go global. As he was quoted in an interview in Ernst & Young’s T Magazine in 2011, “I believed that Tata could not remain a purely Indian company. Its future had to lie outside India.” The captains leading the Tata companies got into the act, unleashing a series of cross-border acquisitions.

Since 2000, the group has acquired stakes in over 50 overseas companies, in countries including the US, Europe, Australia, Africa and Asia. Barring a few exceptions, the stakes purchased were at least one-third of the ownership, going up to 100 per cent in many instances. For the fiscal year 2012, when Ratan Tata stepped down as the Chairman of the group, 59 per cent of the group’s revenues were from international operations and the group earned ₹7,600 crore as net foreign exchange earnings. 

Growth through expansion in new markets, strategy to move up the value chain, acquiring assets to scale down input costs, acquiring new innovative technology were some of the motives behind these mergers and acquisitions. A little disconcerting however is the dogged pursuit of world renown brands such as Jaguar Land Rover, Star Bucks, Orient Express, and the aspiration to make them a part of the Tata universe.

Here are some of the more talked about acquisitions of the Tatas:

Brewing a storm

The global foray began with Tata Global Beverages’ purchase of the entire UK-based manufacturer of tea-bags, Tetley for $450 million in 2000. Tetley was the second largest tea brand, leading the UK and Canada’s tea bag market with second position in Australia. This deal was then touted as the largest cross-border takeover of an international brand by an Indian firm.

The purchase was based on the premise that the global tea market would be dominated by few brands in the years to come. It also lent muscle to the company to take on competitor — Unilever. The deal gave Tata Tea the impetus to change itself from a pure commodity company in the business of selling tea to a company possessing world class brands. It also opened up the US, UK, Canadian and European market for Tata Tea’s products.

Steel in trouble

Tata Steel’s $12 billion purchase of Anglo-Dutch steel company Corus in January 2007 is the largest and the most criticised cross-border acquisition of Ratan Tata. This deal moved Tata Steel to the fifth position from 56th in terms of global capacity then. The earlier purchase of NatSteel Asia in 2005 and Millennium Steel in 2006 had already bolstered Tata Steel’s access to South East Asian and Chinese markets.

The deal was however concluded 30 per cent higher than the initial offer in October 2006 making many say that the deal was overvalued. Corus’ operating margins at 9 per cent, at the time of purchase, were also much lower than the 32 per cent margins of Tata Steel.

But the acquisition ran into trouble with demand for steel in the UK and Europe hit by the economic slow-down that began in 2008. This coupled with the inability to pass on higher cost of raw materials to end users eroded profitability. Tata Steel exited Corus in 2021 by splitting the company into two entities — Tata Steel UK and Tata Steel Netherland.

Motoring profits

Tata Motors’s purchase of Jaguar and Land Rover brands from Ford for about $2.3 billion in March 2008 is another much-talked about buy that has been much more successful that the Tata Corus one. 

This acquisition was not well received by analysts and the stock market, with the Tata Motors stock declining sharply after the deal was announced. At the time, there were concerns that Jaguar and Land Rover — premium brands for luxury saloons and sports cars — would not fit well with Tata Motors’ existing product portfolio, that included utility vehicles and run-of-the-mill passenger cars. Doubts were also raised for demand for JLR in Indian market.

But even as the domestic operations of Tata Motors struggled with slowing demand and high input costs, JLR’s bottom-line showed profits. Factors that helped make this acquisition a success are — one, Tata Motors has managed to keep the brand identity of JLR separate and undiluted; two, it has focused more on emerging markets such as Russia and China for volumes; three, it has moved a portion of the material and component sourcing and assembling of vehicles to low-cost countries like India and China.

The purchase of Daewoo Commercial Vehicle Company in 2004 for $102 million was yet another major global acquisition in the automotive sector which gave a group access to cutting edge technology for manufacture of heavy vehicles.

Crowning glory

Indian Hotels, the owner of hotels and resorts, has also expressed its intent to have a presence in “key gateway cities of the world”. The company went about this goal either through purchase of existing hotels or by setting up new hotels.

It has made three deals in the US — the purchase of Campton Place, San Francisco, lease agreement to operate and manage The Pierre, the landmark hotel on New York‘s Fifth Avenue in 2005 and purchased of the entire stake in 80-year-old Ritz-Carlton Hotel on Arlington Street, renamed as Taj Boston in January, 2007.

Other renowned overseas properties of the company include the Taj Exotica Resort & Spa at Mauritius and the Maldives, 51 Buckingham Gate in London, and Blue, Woolloomooloo Bay in Sydney.

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