7/28/2019 Corus Deal

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The board of directors of Anglo-Dutch steelmaker Corus has accepted a $7.6 billion takeover bid from Tata Steel [ Get Quote], the twosides confirmed on Friday.

The deal is the largest Indian takeover of a foreign company and will create the world's fifth-largest steel group.

In 2005, Tata Steel was only the world's 56th biggest steel producer and its takeover of Corus represents its first expansion outside

Asia.

"The board has recommended Tata Steel's offer. We are hopeful that the shareholders will accept it," David Jackson, director

(communications) of Corus, told CNBC-TV18 news channel on Friday.

Tata Group chairman Ratan Tata [Images] also confirmed that it has agreed to acquire the European steel company at 455 pence per

share, putting the enterprise value of Corus at about $10 billion.

"This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through

international expansion," Tata said.

Jackson said the deal comes at the "right time and at the right price" and expressed hope that shareholders as well as trade unions

would respond positively to the offer.

Ratan Tata, who is also chairman of Tata Steel, was quoted in an AFX report as saying that the two companies have compatible

cultures of commitment to stakeholders and complimentary strengths in technology, efficiency, product mix and geographical spread.

As per the agreement, 75 per cent of Corus shareholders would have to tender their shares for the acquisition to be complete.

When complete, this would be the largest takeover by an Indian company overseas. The deal would also catapult the combined entity

to among the world's largest steel companies with a total capacity of about 24 million tonnes per year.

B Muthuraman, managing director of Tata Steel, said in a press meet in London [ Images] that the new, combined entity of Tata Steel

Corus would have a capacity of 40 million tonne by 2011-12.

"The combined entity will have a turnover of $32 billion by 2011-12 with an EBIDTA margin of 25%," Muthuraman said.

He also discussed the six-pronged strategy outlined by Tata Steel in 2003 where the target was to increase capacity from 4 million

tonne then to 30 million tonne by 2015.

Muthuraman was addressing the media in a meet attended by Tata Group chief Ratan Tata along with the top management team o

Corus CEO Phillipe Varin and chairman Jim Leng. Ratan Tata said the"offer" was the right offer, and was it was not "appropriate" to say

anything more on the issue.

Kaushik Chatterjee, VP (Finance) of Tata Steel, said the transaction has been based on an enterprise value of $10.26 billion. Out of thisTata Steel will fund $3.5 billion, and the remaining would be raised through the SPV floated for the purpose

Muthuraman said that there will be no change in Corus management. "We are not going to stop with here. Corus will complete its own

plans, and there will be no change in Corus managment," Muthuraman said.

He added that an integration committee will be put in place, and the buy will open new markets for the company.

Tata-Corus among top 5 deals

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7/28/2019 Corus Deal

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