Threat or Opportunity?
Studies in International Investment series
Edited by Karl P. Sauvant
Chapter 1: The Rise of TNCs from Emerging Markets: The Issues
Karl P. Sauvant INTRODUCTION The subject of this volume – the rise of transnational corporations (TNCs) from emerging markets: threat or opportunity? – is topical and important, and it poses a number of challenges that will require considerable policy attention in the future. 1.1 TOPICALITY The topicality of the subject is exempliﬁed by a spate of recent high-proﬁle takeovers by emerging-market TNCs of ﬁrms in developed and developing countries. Examples are: ● ● ● ● ● Lenovo’s (China) acquisition of the personal computers division of IBM (United States). When the deal was completed in 2005, Lenovo paid $1.25 billion with a total cost of $1.75 billion, including assumed debt. CVRD’s (Brazil) takeover of INCO (Canada) in 2007, for $16.7 billion. Tata’s (India) successful bid (against the competition of Companhia Siderúrgica Nacional of Brazil) for Corus (United Kingdom/ Netherlands). The deal was reached in 2007, for a total price of $13.5 billion. Hindalco (India) bought Novelis (US) in 2007 for $6 billion. Dubai Ports World’s acquisition of P & O Steam Navigation Company (United Kingdom), an event that led to an excited policy debate in the US as Dubai Ports World would then have controlled a number of ports in that country (Dubai Ports World eventually had to divest itself of its US assets). The sale for $6.8 billion dollars was approved in 2006. 3 4 ● ● ● ● Overview Cemex (Mexico) bought Rinker (Australia) for $15.5 billion in 2007, the largest takeover in Australia’s history. Lukoil Overseas Holding Ltd (Russia) purchased Nelson Resources Ltd (United Kingdom) in 2005...
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