Presentation On Tata Corus
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TATA & CORUS (A case of Acquisition)
COMPANY’S PROFILE TATA STEEL • Founded in 1907,byJamsetji Nusserwanji Tata. • Tata company listed on BSE and NSE and employs about 82700 (2007) people. • started with a production capacity of 1,00,000 tones has transformed into a global giant .
• Its revenue in 2005-2006 was 5.0 billion US $. • It has a main steel plant located at Jamshedpur. • The Company also has three Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh.
CORUS STEEL • Corus is Europe's second largest steel producer. • Corus group was formed on 6th October 1999. • Company has four divisions: Strip product , Long product , Aluminum and Distribution and Building system.
• Corus main steelmaking operations primarily in the UK and the Netherland. • Corus provides innovative solutions. • It is listed on London stock exchange.
VISION We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship
CHALLENGES 1. 2. • • •
FINANCIAL ASPECTS. NON FINANCIAL ASPECTS Cultural differences Structures and Compensation models Foreign ‘political’ Environment.
THE DEAL
ABOUT THE DEAL • TATA Acquired CORUS on 2nd April 2007 which is 4 times larger than its size. • The deal price was $ 12 Billion. • TATA Steel,the winner of the auction for CORUS declares a bid of 608 Pence per share.
• In 2005 when the deal was started the price per share was 455 pence. • TATA Surpassed the final bid from Brazilian steel maker ‘COMPANHIA SIDERURGICA NACIONAL’ (CSN) of 603 pence per share. • The combined entity has become the world’s fifth largest steelmaker after the deal.
• For this deal TATA has finance only 4 Billion $ from internal company resources. • TATA Have secured funding commitments from its advisors. • These advisors were Deutshe bank,ABN Amro and Standard Chartered.
IMPORTANCE OF DEAL FOR TATA • The initial motive behind the deal was not CORUS revenue size but rather its market value. • To compete on global scale because then TATA was just at 56th rank in steel production. • To get access to CORUS technology as well as its production site.
•Acquiring Corus will give Tata access to European customers of steel. •To save costs from marketing to buying. •Tata also get to lay its hand on technology and saves on R & D. •Payoffs are immediate.
FOR CORUS • To extend its Global reach through TATA. • To get access to Indian Ore reserves, as well as virgin market for steel. • To get access to low cost materials. • Due to tough competition with ArcelorMittal.
• Saturated market of Europe. • Decline in market share and profit.
PROCESS OF DEAL • SEP 20,2007:Corus steel has decided to build a strategic partnership with a co. that is a low cost producer. • OCT 5,2006:The Indian Steel giant,Tata steel wants to fulfill its ambition to expand its business further. • OCT 17,2006:Tata steel has kept its offer to 455p. per share.
• OCT 18,2006:Tata steel doesn't react to Corus and its bid price remains the same. • OCT 20,2006:Corus accepts terms of £4 .3 Billion takeover bid from Tata steel. • OCT 23,2006:The Brazilian steel group CSN recruits a leading investment to bank to offer advice on possible counter offer to Tata steel’s bid.
• OCT 27,2006:Corus is criticized by the chairman of JCB,Sir Anthony Bamford for its decision to accept an offer from Tata. • NOV 3,2006:The Russian steel giant Severstal announces that it will not make a bid for Corus. • NOV 18,2006:The battle over Corus intensifies when CSN approached the board of the co. with a bid of 475p.per share.
• DEC 18,2006:Tata steel increased its bid for Corus to 500p. Per share. • Then CSN made its formal counter bid for Corus at 515p. Per share in cash. • JAN 31,2007:Britain’s takeover panel announces in an emailed statement that after an auction Tata steel had agreed to offer Corus investors 608p.in cash. • APRIL 2,2007: TATA ACQUIRED CORUS.
GLOBAL STEEL RANKING COMPANY
1.Arcelor-Mittal 2.Nippon steel 3.Posco 4.JEF steel 5.Tata steel- Corus
CAPACITY in (million tones)
110.0 32.0 30.5 30.0 27.7
Post Acquisition • New entity will be run by one of Tata’s steel subsidiaries. • Seven members committee. • The deal was expensive. • Decline in Tata’s share. • Increase in corus shares.
(Closing Price) 31st Jan2007 – 463.95 Highest Price - 510 (on 31 Jan 2007) Lowest Price -300 (on 8 March 2007)
2nd April2007-424.10
COMPANY’S PROFILE TATA STEEL • Founded in 1907,byJamsetji Nusserwanji Tata. • Tata company listed on BSE and NSE and employs about 82700 (2007) people. • started with a production capacity of 1,00,000 tones has transformed into a global giant .
• Its revenue in 2005-2006 was 5.0 billion US $. • It has a main steel plant located at Jamshedpur. • The Company also has three Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh.
CORUS STEEL • Corus is Europe's second largest steel producer. • Corus group was formed on 6th October 1999. • Company has four divisions: Strip product , Long product , Aluminum and Distribution and Building system.
• Corus main steelmaking operations primarily in the UK and the Netherland. • Corus provides innovative solutions. • It is listed on London stock exchange.
VISION We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship
CHALLENGES 1. 2. • • •
FINANCIAL ASPECTS. NON FINANCIAL ASPECTS Cultural differences Structures and Compensation models Foreign ‘political’ Environment.
THE DEAL
ABOUT THE DEAL • TATA Acquired CORUS on 2nd April 2007 which is 4 times larger than its size. • The deal price was $ 12 Billion. • TATA Steel,the winner of the auction for CORUS declares a bid of 608 Pence per share.
• In 2005 when the deal was started the price per share was 455 pence. • TATA Surpassed the final bid from Brazilian steel maker ‘COMPANHIA SIDERURGICA NACIONAL’ (CSN) of 603 pence per share. • The combined entity has become the world’s fifth largest steelmaker after the deal.
• For this deal TATA has finance only 4 Billion $ from internal company resources. • TATA Have secured funding commitments from its advisors. • These advisors were Deutshe bank,ABN Amro and Standard Chartered.
IMPORTANCE OF DEAL FOR TATA • The initial motive behind the deal was not CORUS revenue size but rather its market value. • To compete on global scale because then TATA was just at 56th rank in steel production. • To get access to CORUS technology as well as its production site.
•Acquiring Corus will give Tata access to European customers of steel. •To save costs from marketing to buying. •Tata also get to lay its hand on technology and saves on R & D. •Payoffs are immediate.
FOR CORUS • To extend its Global reach through TATA. • To get access to Indian Ore reserves, as well as virgin market for steel. • To get access to low cost materials. • Due to tough competition with ArcelorMittal.
• Saturated market of Europe. • Decline in market share and profit.
PROCESS OF DEAL • SEP 20,2007:Corus steel has decided to build a strategic partnership with a co. that is a low cost producer. • OCT 5,2006:The Indian Steel giant,Tata steel wants to fulfill its ambition to expand its business further. • OCT 17,2006:Tata steel has kept its offer to 455p. per share.
• OCT 18,2006:Tata steel doesn't react to Corus and its bid price remains the same. • OCT 20,2006:Corus accepts terms of £4 .3 Billion takeover bid from Tata steel. • OCT 23,2006:The Brazilian steel group CSN recruits a leading investment to bank to offer advice on possible counter offer to Tata steel’s bid.
• OCT 27,2006:Corus is criticized by the chairman of JCB,Sir Anthony Bamford for its decision to accept an offer from Tata. • NOV 3,2006:The Russian steel giant Severstal announces that it will not make a bid for Corus. • NOV 18,2006:The battle over Corus intensifies when CSN approached the board of the co. with a bid of 475p.per share.
• DEC 18,2006:Tata steel increased its bid for Corus to 500p. Per share. • Then CSN made its formal counter bid for Corus at 515p. Per share in cash. • JAN 31,2007:Britain’s takeover panel announces in an emailed statement that after an auction Tata steel had agreed to offer Corus investors 608p.in cash. • APRIL 2,2007: TATA ACQUIRED CORUS.
GLOBAL STEEL RANKING COMPANY
1.Arcelor-Mittal 2.Nippon steel 3.Posco 4.JEF steel 5.Tata steel- Corus
CAPACITY in (million tones)
110.0 32.0 30.5 30.0 27.7
Post Acquisition • New entity will be run by one of Tata’s steel subsidiaries. • Seven members committee. • The deal was expensive. • Decline in Tata’s share. • Increase in corus shares.
(Closing Price) 31st Jan2007 – 463.95 Highest Price - 510 (on 31 Jan 2007) Lowest Price -300 (on 8 March 2007)
2nd April2007-424.10
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