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Revisiting Cross-Border Deals

 December 27, 2012 09:36 AM


As we approach the end of another year, and in the interest of intellectual honesty, I thought now would be a good time to revisit some of the predictions I've made regarding cross-border deals over the years.

Hits

Tesco's entry into the U.S. Market – Several years ago I suggested that Tesco would face some serious headwinds in the U.S. market (see Tesco's Venture into the U.S.). Consistent with my expectations, it now seems Tesco is considering ending its presence in the U.S. because the "journey to scale and acceptable returns will take too long relative to other opportunities" (see Supermarket Tesco says ready to exit U.S.).

[Related -The Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater]

Misses

Tata JLR – I was skeptical of Tata's acquisition of JLR (see Foreign Takeover Troubles?, Tata and Jaguar/Rover RevisitedUpdate: Tata and Jaguar/Rover, Progress Report: Tata Motors and JLRBuyers Remorse: Will Tata Rue the Purchase of Jaguar and Land Rover?). Although Indian firms have had a pretty bad track record acquiring companies overseas, the JLR acquisition has bucked the trend. JLR sales have, so far, exceeded expectations (see Tata Profit Up on JLR Sales). So as of today, I've gotten this one wrong. Of course, these things take years to play out, and I still think we need a few more JLR product cycles to reach a definitive conclusion. But as the Magic 8-Ball used to caution, I think it's only fair to say, "Outlook not so good" for my prediction thus far.

[Related -Angie's List Inc. (ANGI) Q2 Earnings Preview: Trending Towards a Smaller Loss than Expected]

Unclear

Fiat Chrysler - Again, I was very skeptical about this deal (see Fiat-Chrysler Darts ForwardFiat/Chrysler RevisitedCan Fiat Really Pull It Off, and Is Fiat Nuts?). Fiat is certainly struggling; however, Chrysler has experienced something of a revival (see Fiat Europe Struggling). I cannot say for sure whether Fiat will ultimately succeed in the U.S., and/or with its ownership interest in Chrysler, but so far, my predictions for Chrysler's demise have been postponed, …perhaps indefinitely??

Anyhow, business predictions aside, here's to wishing you all a happy and healthy New Year!

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