Deadly Sins of International Business Blog

Inspired by the recently announced sale of Volvo to Zhejiang Geely by Ford Motor, I tried to find out what’s happening to British Jaguar Land Rover that has been acquired by Tata Motors of India in 2008. Well, the news has been mixed. In fall 2009, Tata Motors has announced plans to close one of two Jaguar Land Rover factories in England by 2014. This didn’t seem surprising for ailing car brands. It made even more sense when the year-end results showed a loss of $565 million. Most recently however, in March 2010, the US magazine BusinessWeek reported that sales are picking up and Tata’s luxury division has even turned a profit of $141 million in the most recent quarter. New executives have been hired away from GM and BMW, so everything looks good. This will certainly be a transnational acquisition that continues to be of interest.

Last year Maerklin, German manufacturer of high quality toy trains slipped into bankruptcy. As the Financial Times Germany reports, former US rival and market leader in the United States, Lionel has shown keen interest in acquiring the ailing German company. While there seemed to be tangible urgency to find a new owner originally, 2009 has been a surprisingly good year that renders smaller Lionel’s (sales 2009 about US$ 80 mio) offer just not good enough. With about EUR 110 mio in sales last year, Maerklin made it back into the profit zone and is flush with cash. It may have become more attractive for other investors which supposedly include Sun Capital. Ironically, Lionel has been through a bankruptcy itself in 2007 when it was snatched up by investment bank Guggenheim Partners.

As has been reported, the Kraft-Cadbury takeover battle is almost over. After Kraft has upped its offer, the board of British chocolatier Cadbury has approved the takeover. Only very few voices remain opposed to the deal now, including its founder’s, George Cadbury’s great-granddaughter, Felicity Loudon. In an interview she said that Kraft had no idea what Cadbury really is about and doesn’t want it to become the latest in a row of British companies being taken over by foreign owners (including Rolls Royce being owned by BMW of Germany, Manchester United owned by US investor Malcolm Glazer or Rowntree (maker of After Eight) being owned by Nestle of Switzerland).

Amsterdam-based brewer Heineken announced that it will acquire the beer operations of Mexican Femsa through an all-share transaction. The hope is not only to strengthen some of Femsa’s brands in Central and Latin American markets, but also to build out the premium market for Heineken’s own brand. And yes, as usual, there’s talk of cost-saving synergies.

As the New York Times reports, US-based cable TV operator Liberty Global takes over Germany’s Unity Media for $3.7 bn. A case to watch.

Hold the horses! Stop the presses! Forget all about my previous comments about the GM-Opel-Magna-Sbersk deal because the deal is off. GM announced that it withdraws its prior agreement under which the  Austro-Canadian conglomerate Magna would have purchased Opel from it. Even insiders are still wild guessing about the true motivation for hitting the brakes. Some say that it’s a matter of GM having emerged from bankruptcy flush with cash and therefore don’t need to get rid of Opel any more. Others suspect a tactical move behind this. What somehow puzzles me is a recent photo showing Russian oligarch Oleg Deripaska with Magna International chairman Wolf and GM CEO Henderson in the United States. Deripaska whose automotive company GAZ would have hugely benefitted from the deal has been denied US visas for several years and now has been brought in by special arrangement of the FBI. Word is also that Magna is not really sad about the deal being cancelled fears of jeopardizing good relationships with other customers among the automotive brands kept mounting. What’s interesting is that the GM made the announcement as German chancellor Angela Merkel was about to board a plane back to Germany after an important state visit to the United States. According to German media, this didn’t go down well with the German government which now may be looking into withdrawing commitments for subsidies to Opel.