Tata Communications' Acquisition of Tyco Global Network (A)

In 2004, Tata Communications (TCL) was trying to act on its strategic intent to become a globally connected network provider. It had two alternatives: build or buy. The build option would provide TCL with a chance to develop its own network under its own terms. The possible acquisition of the Tyco Global Network (TGN), however, provided a unique opportunity for TCL to establish this global position quickly. As one of the largest global networks at the time of the case, the TGN was a limited asset. The acquisition of the TGN would catapult TCL into being a top player in global Internet connectivity. Even though the acquisition price was low, the associated liabilities and risks could make this a substantially expensive acquisition for TCL. Should TCL negotiate with Tyco? If yes, what would be an acceptable position to proceed with the deal? How should TCL plan for the mitigation of risks and uncertainties? If not, what would be the consequences of losing the TGN opportunity, particularly if a competitor acquired it?<br><br>See also supplement 9B14M138.

The (A) and (B) cases allow students to explore decisions that are important to undertaking international acquisitions. The cases move beyond the typical points covered in acquisition cases, as the pricing and the strategic rationale for an acquisition are emphasized. Successful analysis of the cases involves an evaluation of the acquisition cost, an analysis of the potential liabilities and risks of the acquisition, an assessment of the acquisition’s strategic impact on TCL and a consideration of safeguards that could be put in place should the acquisition go awry. This case can be used in a (global) strategy course, a course on acquisitions or one on emerging-market multinationals.

• Acquisition
• internationalization
• strategy implementation
• India