By:

Sourabh Soni

TATA & CORUS: A Case Of Acquisition

ObjectivesIntroduction.Indian Steel Market.Global Steel Market : Overview.CORUS Steel Industry.The DEAL.TATA after Acquisition.Conclusion.

IntroductionAcquisition

Mergers

Joint ventures

Why it is needed?

Indian Steel MarketTata 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 : OverviewIISI 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 Capacity(in million tonnes)

Arcelor - Mittal 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 systemOperates as an International companyCore business in Manufacturing, Development and

Allocation of Aluminum and Steel products and services

Wide variety of products and servicesLargest steel producer in UK with £10,142 million

annual revenue and work force of 50,000 employees

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 pence per share in cash

Jan 31, 07 : Tata had agreed to offer Corus investors 608 pence per share in cash

Apr 02, 07 : Tata steel manages to win acquisition to CSN and has the full voting support from Corus shareholders

TATA After AcquisitionSeven 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