Tata & Corus Deal

TATA & CORUS: A Case Of Acquisition By: Sourabh Soni

Objectives Introduction. Indian Steel Market. Global Steel Market : Overview. CORUS Steel Industry. The DEAL. TATA after Acquisition. Conclusion.

Introduction Acquisition Mergers Joint ventures Why it is needed?

Indian Steel Market Tata steel industry was the first Indian

steel industry established 1907.

It holds an important place in the Indian

business history.

Tata started other business in India in a

short span of 30 years.

Cont… Steel industry (heavy industry) is

considered as a very influential factor in the modern economy.

India is considered as a major exporter of

steel on a world map.

Due to this, antidumping actions has been

taken by developed countries.

Global Steel Market : Overview IISI forecasts the global steel demand

would be 1.32 billion tones by 2010. Much of these demand generated from

India and China China highest Steel producing country

Global Steel ranking Company Arcelor - Mittal

Capacity(in million tonnes) 110

Nippon Steel

32

Posco

30.5

JEF Steel

30

Tata Steel - Corus

27.5

Bao steel China

23

US Steel

19

Corus Steel Industry Formed on 6th Oct 1999, through merger of

2 companies : British Steel and Koninklijke Hoogovens. Consist of four divisions : Strip products, Long products, Aluminum and Distribution, Building system Operates as an International company Core business in Manufacturing, Development and Allocation of Aluminum and Steel products and services Wide variety of products and services Largest steel producer in UK with £10,142

The DEAL.. Officially announced on April 2nd 2007. TATA’s motive is to capture the market value. Total value of this acquisition was $12 Billion

(608 pence per share except 603 per share). Corus gained profitable opportunity to exit and a buyer for some time.

Ups and down  Sep 20, 06 : CORUS uses the strategy to work with low cost

producer.  Oct 06, 06 : Initial offer by TATA is considered to be too low.  Oct 17, 06: TATA kept its offer to 455 pence per share.  Oct 20, 06 : CORUS accepts the offer of £4.3 billion.  Oct 23, 06 : Brazilian Steel Group CSN counter-offer to TATA’s offer.  Oct 27, 06 : CORUS criticized by JCB for acceptance of TATA’s offer.  Nov 18, 06 : The CSN approaches Corus With an offer of 475 pence per share  Nov 27, 06 : Board of Corus decides to give more time for shareholders to decide whether it issue forward a formal offer.  Dec 18,06 : Tata increases its original bid for Corus 500 pence per share, then CSN made its counter bid at 515

TATA After Acquisition Seven member team for this DEAL. TATA has to pay $12 billion, where 2/3rd

was being financed. Immediate effect on TATA.(10.7%) After the bidding conflict with CSN, TATA ended up paying more to CORUS. Still TATA earned operating profits of $840 million on sales of 5.3 million tonne of steel, while CORUS earned $860 million on sales of 18.6 million tones of steel.

Conclusion “ I believe this will be the first step in showing that Indian industry can step outside the shores of India in an international market place and acquit itself as a global player”

- Ratan Tata