Canada: Indian M&A Activity In Canada: The Paradigm Shifts

Multinational corporations in emerging economies are looking to mergers and acquisitions as a means to tap quickly into new markets and assets. While discussions of Asian M&A have traditionally focused on China, the increasing economic power of India has led to an exponential increase in M&A involving Indian companies. Such activity was once confined to the domestic sphere or to foreign investments on Indian soil. In recent years, however, the paradigm has shifted: Indian companies are now, more than ever, participating as active and visible players in the outbound, cross-border M&A game.

Driven by a desire to grow quickly and globally, Indian firms are seeking entry into European and North American markets rather than making acquisitions locally or being bought out themselves. Furthermore, industry observers foresee continued growth in the pace of acquisitions by Indian companies in the near future. Who are the targets of this buying spree? While U.S. and European corporations are now regularly being acquired by Indian corporations, Canada has also fallen onto the Indian "radar". In fact, the Canadian industrial landscape, in many ways, provides an attractive stalking ground for Indian acquirors on the hunt.

To date, Indian cross-border M&A transactions have almost always been structured as negotiated ("friendly") all-cash transactions for the target entity. Nevertheless, Indian buyers carrying out friendly transactions in Canada should be aware that there are still significant legal issues which must be considered in order to complete the transaction in the most effective and efficient way possible.

Key drivers of Indian overseas acquisitions

The burgeoning trend towards outbound M&A by Indian corporations, versus domestic acquisitions or inbound transactions from foreign acquirors, has been triggered by a number of factors.

Indian growth cycle

Broadly speaking, many Indian corporations epitomize the classic corporate growth model. After a decade of strong domestic growth, cash-rich Indian companies are now at the point in their evolution where they can realistically rely on foreign acquisitions as their primary growth mechanism. Some of these corporations are even participating in multiple M&A transactions in order to build an interest in different businesses in a variety of industries.

Government policy and regulation

Government restrictions on foreign direct investment in certain sectors of the Indian economy have further fuelled the trend towards outbound, versus inbound, Indian M&A. Additionally, Indian companies have benefited from an Indian regulatory regime that has gradually relaxed controls on the outbound flow of capital, making it easier for Indian corporations to sell securities and raise financing abroad. Furthermore, the lowering of import tariffs in India has enhanced domestic competition, thus compelling Indian corporations to access markets abroad.

Global economic conditions

The global business environment has played a key role in facilitating the upsurge in Indian cross-border M&A. The rising value of the rupee against the U.S. dollar has provided Indian CEOs with more buying power when contemplating a foreign expansion. Similarly, the rise in valuations of Indian companies, combined with a fall in the U.S. stock market, has further favoured outbound M&A by Indian companies, versus inbound investments by their Western counterparts.

Along with the stockpiles of cash that Indian corporations have been accumulating over the last decade, Indian companies are also not facing the same challenges that their North American and European counterparts are encountering in obtaining financing to acquire overseas companies. Domestic Indian lenders such as ICICI and HDFC have not been impacted to the same extent as their North American counterparts by the credit and liquidity crises afflicting global financial institutions. These banks have been happy to extend credit to Indian corporations, and such financing practices have not been confined to the Ambanis and Premjis, but to the small and medium-sized enterprises (SMEs) as well.

While the long-term impact of the U.S. credit crunch on Indian cross-border M&A may not yet be discernable, many observers are of the view that cash-rich Indian corporations may have a competitive advantage in bidding against firms whose traditional sources of financing have become restricted. Additionally, with Indian corporations and markets growing faster than many of their Western counterparts, many U.S. and European private equity funds are increasingly happy to help finance the Indian M&A frenzy. Such M&A activity may accelerate if large numbers of distressed assets become available at affordable prices in the so-called "credit-crunch" economies.

Cultural factors

Indian companies are also endowed with certain key familiarities with the West, which make doing business easier. English is the official business language in India, and therefore effective communication is seldom an obstruction in business negotiations. Furthermore, India is the world's largest democracy and its legal system is grounded in the British common law tradition. Indian business leaders are therefore not taken aback by the regulatory and legal issues surrounding cross-border acquisitions in North America and Europe. Each of these commonalities provide Indian firms with additional "comfort factors", and make corporations in North American and European countries more attractive for acquisition purposes.

A change in attitude

Many have also attributed the outbound Indian M&A trend to an overall change in mindset amongst Indian CEOs and management teams. Where Indian business ventures were once typically characterized by marked caution, corporate leaders are now seeking to explode onto the global stage and "prove themselves to the West", especially in light of the recent high-profile international deals executed by large Indian conglomerates (as described below). These sentiments have been fuelled by the pressing need for Indian corporations to establish the strength of their brands globally.

Sovereign wealth funds

Finally, it should be noted that although India does not currently have a sovereign wealth fund, if India does establish such a fund (as many observers expect it will), out-bound Indian M&A activity could increase significantly.

Recent transactions

A wide range of Indian acquirors have participated in the cross-border M&A wave recently. Examples of some of the more significant large-cap ("mega-deal") M&A transactions to date are set forth in the following table:

Selected Outbound M&A Transactions Valued at 1 Billion Dollars or More1 ("Mega" Deals)


Foreign Target

Target Industry

Target Country

Approximate Value (U.S.$)

Mittal Steel Co.2

Arcelor S.A.



$47.44 billion

Tata Steel Ltd.

Corus Group PLC



$14.85 billion

Hindalco Industries Ltd.

Novelis Inc.



$6 billion

Sterlite Industries India Ltd.

Asarco Inc.



$2.6 billion

Tata Motors Ltd.3

Ford Motor Co.'s Jaguar Limited and Land Rover Holdings



$2.3 billion

Essar Steel Ltd.4

Algoma Steel Inc.



$1.57 billion

United Spirits Ltd.

Whyte & Mackay Ltd.

Food and Beverages


$1.18 billion

Tata Power Company Ltd.

30% stake each in PT Kaltim Prima Coal and
PT Arutmin Indonesia



$1.1 billion

Tata Chemicals Ltd.

General Chemical Industrial Products Inc.



$1 billion

Canada as a target

As evidenced above, while U.S. and European targets are now more regularly being acquired by Indian buyers, Canadian companies have begun receiving increased attention as well. It is important to note that the myth that Indian business is all about IT and outsourcing has been dispelled. Along with the IT and software sectors, the auto industry, pharmaceuticals and banking have long been target industries for Indian corporations. Moreover, recently there has been significant M&A activity by Indian companies in traditional "old economy" sectors such as mining, energy and power (including oil and gas), chemicals, steel, aluminum and other metals, auto components, commodities and telecom.

Considering Canada's prevalence of significant oil and gas, mining and natural resource players, along with the presence of industry leaders in the chemical, automotive parts and IT/software industries, an increase in M&A by Indian buyers in the Canadian market is a distinct possibility. As an example of this trend, it has been widely reported that Indian companies could invest up to U.S. $2.5 billion for stakes in Canadian oil sands projects as a part of efforts to secure overseas energy assets to fuel the country's fast-growing economy.

Other "old-economy" sectors of the Canadian economy may be targeted by Indian acquirors as well. For example, with Indian financial institutions continuing to thrive in comparison to their North American counterparts, there have recently been reports of large Indian financial institutions planning acquisitions of smaller players (i.e., "consumer franchises") in the U.S. or Canadian markets.

Thus, from all angles, an increase in India-generated M&A in the Canadian market may in fact be more a question of "when", rather than "if".


1 The information in this table has been compiled from the Capital IQ database.
2 Stikeman Elliott LLP advised Mittal in this transaction.
3 Stikeman Elliott LLP advised Tata in this transaction.
4 Stikeman Elliott LLP advised Essar in this transaction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions