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Havells India: the Sylvania Acquistion Decision

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1. Havells’ proposed acquisition of Sylvania Limited Inc. (SLI) makes sense from a strategic point of view. Macroeconomic conditions and an increasing threat of competition give merit as to why this proposed acquisition makes strategic sense. The electrical and lighting industry is poised for a major growth spurt (page 3), and this could pan out to be a lucrative time for companies such as Havells to begin investing in both these segments. Havells has become a dominant player in the switchgear market (page 4), and it has smaller positions in the cable and wire (C&W) and electrical consumer durables (ECD) industries, both of which faced stiff competition. Even though, Havells has a good footing in their Indian domestic market, …show more content…

These 10 factors are the top 5 advantages and top 5 disadvantages in the deal.

Using this framework, as shown in the appendix, I have determined the likelihood of success in this acquisition is 45%. One of the major success factors was the cross-segment benefit that arises, such as leverage bundling deals and SLI’s wide marketing network. A major success factor is the geographic diversity that this acquisition provides, which allows Havells to move into other regions. One of the major failure factors is the management differences due to one company being family run and more aggressive and entrepreneurial while the other company, which is non-family run, is mature and conservative in nature. A major failure factor is the huge financial risks that have to be taken ($200 million) to finance the acquisition of SLI by Havells. If Havells cannot pay back the lenders, management may have to break up and sell its parts. As an advisor, I recommend proceeding with this acquisition as its success factors outweigh its failures. Even with a 45% chance of success, these risks can be managed and challenges can be dealt with, these opportunities to expand operations are not abundant. Appendix

Success Framework Advantages | Score | Cross-segment benefit | +9 | Geographic diversity | +10 | Product diversity | +8 | Vision alignment | +7 | R&D Synergy | +4 | Total Advantages | 38 | Cultural differences | -4 | Management

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