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Siemens-elpro acquisition

Siemens-elpro acquisition

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Published by mandar

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Published by: mandar on Sep 24, 2009
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09/27/2011

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Siemens-ElproAcquisition
 
Abstract
:
Organisations either grow by organic or by inorganic manner. Organic method is alwaystime consuming and costly, while inorganic one has been proven profitable by manyorganisations. Whole world has witnessed last decade as a year of overseas, and domesticmergers and acquisitions. Best examples of that are Tata-Corus, Arcelor-Mittal, andHindalco-Novelis etc. Addition to these examples is Siemens acquiring ElproInternational Ltd.Followings are the main issues to be discussed for critical review of this case:1.What is the strategic rationale for this acquisition?2.What is the future outlook of this acquisition?3.What are the advantages to both the parties for acquisition?
INTRODUCTION:
Siemens Ltd. acquired Elpro International Ltd. to acquire Elpro's isolator business.Strategically, the acquisition of Elpro takes Siemens India onto the technology to produceisolators indigenously. The acquisition of Elpro by Siemens bodes well for both theentities. Elpro produces high voltage isolators. This is exactly what Siemens India wantedto manufacture. This makes the bond a perfect fit. Currently Siemens, an integrated player, manufactures all products related to power transmission and distribution. In factSiemens is a global player with $78 billion revenue last year.Siemens has completed this acquisition through its subsidiary Siemens India Ltd. and hasacquired 100% of Elpro shares. The deal made Siemens acquire technology with costadvantage and access to 10% of south-Asian market in isolators. Siemens Ltd hascompleted its acquisition of Elpro International Ltd. under an agreement in which Elprowill operate as a subsidiary of Siemens ltd.
 
Siemens Ltd.
Siemens is today a technology giant in more than 190 countries, employing some475,000 people worldwide. Their work in the fields o
energy, industry,communication, information, transportation, healthcare, components and lighting
has become essential parts of everyday life.In the Energy sector, their expertise ranges from power plants to turbines and in theIndustry sector; they build airports, as well as produce contactors.
 
They have a wide presence across the globe with network of 475,000 people, operating in over 190countries, which serves to enhance their standing.Siemens energy is world leader in isolator, high voltage circuit breaker, transformers, andcontactor business. They manufacture these products in varied capacity from 17 KV to800 KV.But, before Siemens acquired Elpro they didn’t have any isolator produced in India. So toget into that business in India, they acquired business of Elpro.
Elpro International Ltd
.
Elpro International Limited (Elpro) was incorporated in July 1962 as a public limitedcompany, in technical and financial collaboration with General Electric, USA. TheCompany’s corporate headquarters are located in Pune, and its manufacturing facilitiesare based out of Pune and Hyderabad.Elpro International is the one of the few manufacturers outside the United Statesmanufacturing Surge Arresters and Zinc Oxide Discs with GE technology – acknowledged to be the best in the world. The company set up a metal oxide varistor manufacturing plant in its Pune facility in 1986 with technical expertise from GE. Thecompany also acquired an Isolator & Switchgear manufacturing unit in 1994 inHyderabad.Some of Elpro’s national clients include ABB India; Bharat Heavy Electricals Limited(BHEL); National Thermal Power Corporation of India (NTPC); Reliance Industries;Siemens India; Tata Power Company and international clients include GE USA;Isoelectric Italy; KWPA Iran; Saudi Electric Company; Taiwan Power Company andVirginia Transformers USA.

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