Emerging Markets : Bharti Airtel Harbors Global Ambitions



India’s construction industry promises rich returns.

Bharti Airtel, India’s largest wireless company, with 62 million subscribers, is in talks with MTN of South Africa to acquire between 51% and 100% of that company. The deal could potentially be worth $20 billion for the 51% stake and when finalized would be the largest overseas acquisition by an Indian company, topping the $12 billion deal between Tata Steel and the UK’s Corus Group. Bharti has offered 70% stock and 30% cash for the acquisition, with a preference for a 51% stake. MTN’s management has asked for a higher valuation than the $22.63 per share offered by Bharti and prefers a 100% takeover. Bharti Airtel has a current market capitalization of $40 billion, and the merger between Bharti and MTN will create the world’s sixth-largest telecom operator, with a presence in 20 countries.

Bharti is clearly going with the flow: A report from ABN AMRO in India said that the current global market conditions are ripe for Indian companies looking to get more aggressive with overseas acquisitions. In 2007, Indian cross-border M&A; activity was worth $70 billion, mostly concentrated in Europe (acquisitions of Corus, Arcelor, Istanbul Airport and REpower Systems are major examples). In the first three months of 2008, though, just $10 billion of deals have been announced. ABN AMRO believes Indian companies have a competitive advantage in metals and mining, autos and auto components, telecom, technology and power.

French building products company Lafarge, the world’s second-largest cement maker, has become the leading player in the Indian ready-made concrete (RMC) market with its latest acquisition. Lafarge paid close to $400 million to purchase the entire RMC business from Indian engineering giant Larsen & Toubro. The acquisition, which involves the takeover of 66 plants across India, with a total capacity of 4.1 million tons, will give Lafarge a 25% market share and puts it in a comfortable lead over its European rival Holcim of Switzerland in the race to acquire assets in India. Before this acquisition Lafarge had a cement production capacity of 5.5 million tons in India.

Aaron Chaze