How Foreign Companies Takeover the North American Market

How Foreign Companies Takeover the North American Market

The North American market is perhaps the single biggest consumer market in the world, even if we only take the likes of the USA into account. Some of the best online casinos that pay out quickly and through various methods service this particular market, in spite of the online betting market being bigger in the likes of Europe and Asia.

No other foreign takeover has met with so little resistance in Canada. It’s one thing to make an enemy, like Tata. It’s another to make a friend.

But in the world of business, there’s a clear distinction. In the history of Anglo-Indian mergers, the first to meet with an unambiguous failure was the 1985 share sale of Tata Steel, headed by George Allan Mackenzie, then secretary-general of the Commonwealth Federation. His campaign, successfully targeted at Canadian steelworkers, managed to turn the British-Indian tycoon away from Canada with a poisonous sting, intended to harm his reputation in the future. “There is no room in the Canadian steel industry for an enterprise or a business that makes scapegoats of the poor, dispossesses the poor, imports cheap steel, exports raw steel and turns around and destroys the good steel industry,” he said.

The term “plutocrat” should be added to that.

He succeeded. Tata went back to Britain to expand its steelmaking operations and refuse to make steel in Canada or compete with Canadian steelmakers.

Tata’s hostile action was born in part of the influence of Clive Howe, who represented Tata Steel in Britain and also headed its Canadian operations. Howe’s aggressive attitude gave Tata a sense of comfort in Canada. As one insider recalled, “It was pretty clear Tata was making the hostile takeover necessary to ensure the UK was supporting a Canadian steel plant, for what reason was not clear.”

It was an all-Canadian effort to save what was then the largest steel mill in Canada. But Tata knew little about Canada, and their purchases of Canadian steel, warehouses, utilities, computer systems, oil services, mining, insurance companies and the Bank of Scotland would not have guaranteed success, even for a host of future victories.

Why did Tata succeed in wiping out our industry?

How hostile takeovers happen

Nobody disputes that a hostile takeover makes business enemies out of both the target company’s employees and the management and shareholders. But why would a hostile takeover be designed to do that, and how do hostile takeovers actually come about?

How to Turn Hostile Acquisitions Around

Canada, in some ways, has been less hospitable to foreign takeovers since the 1991 financial crisis. According to a 2003 joint study by National Bank Financial and Monetari Generali, 26 percent of hostile acquisitions by European and North American corporations in the late 1980s failed to meet their goals and objectives. While steel producers tend to struggle in Canada, the financial services industry has taken on new risks.

A hostile takeover can help create an enormously profitable financial institution. Through acquisitions, financial institutions can be far larger than a takeover could produce by buying the target firm outright, and that creates an additional advantage. Because financial institutions are a creation of markets, the larger they become, the more they have to absorb losses and recover their financial positions, in both the short and the long term.

David Robertson