TATA-

CORUS

DR. MANISHA DHIR

 THE LARGEST
ACQUISITION OF
ALL THE TIMES
 TATA STEEL

– Tata Steel was established in India as Asia’s first integrated private steel
company in 1907. 
– Tata Steel is currently the world’s second-most geographically diversified
steel producer.
– It is one of the few steel operations that are fully integrated – from mining
to the manufacturing and marketing of finished products.
– Today, Tata Steel operates in 26 countries and have a commercial presence
in over 50 countries with employees across five continents.
 TATA STEEL

– COMPETITIVE ADVANTAGE:
– Continuous improvement
– Value creating initiatives for customers
– Global presence
CORUS

– Corus is a steelmaking company headquartered in London, United

Kingdom, with its main operations in the United Kingdom and the
Netherlands.
– Corus (now Tata Steel Europe) was formed through merger
of British Steel and Koninklijke Hoogovens in 1999.
 TATA AND CORUS DEAL

– Tata acquired Corus, which is 4 times

larger than its size and the largest steel
producer in the U.K.
– The deal, which creates the world's
fifth-largest steelmaker, is India's
largest ever foreign takeover.
– Over the past five years, Indian
companies had made global
acquisitions for over $10 billion.
 TATA AND CORUS DEAL

– Tata acquired Corus on the 2nd of April 2007

for a price of $12 billion making the Indian
company the worlds fifth largest steel producer.
– This acquisition process has started long back in
the year 2005.
– In 2005, when the deal was started the price
per share was 455 pence. But during the time
of acquisition held in 2007, the price per share
was 608 pence, which is 33.6% higher than the
first offer.
TATA AND CORUS DEAL

– The deal (between Tata and Corus) was officially announced on April
2nd, 2007 at a price of 608 pence per ordinary share in cash.
– This deal is a 100% acquisition and the new entity will be run by one of
Tata steel subsidiaries (Tata Steel Europe).
– Even though Corus is larger in size compared to Tata, the company was
valued less than Tata (at approximately $6 billion) at the time when the
deal negotiations started.
– Corus has supported the Tata acquisition due to different motives.
However, with the Tata acquisition Corus has gained a great and
profitable opportunity to make an exit.
TATA AND CORUS DEAL

– The total value of this acquisition amounted to US $12 billion.

– Tata Steel, the winner of the auction for Corus declares a bid of
608 pence per share surpassed the final bid from Brazilian Steel
maker Companhia Siderurgica Nacional (CSN) of 603 pence per
share.
– According to the Scheme regulations, Tata Steel is required to
deliver a consideration not after than 2 weeks following the official
date of the completion of the transaction.
SYNERGIES OF THE DEAL

Low cost + strong

Strategic Economies of
distribution
advantage scale
network

Large scale Marketing of

consolidation finished products
IMPACT OF MERGER ON
COMPANY PROFITABILITY
– The Profit after tax, current ratio, debtors turnover ratio, return on
net worth improved post the acquisition.
CONCLUSION

– Tata acquired Corus for a price of $12b. For this purpose Tata steel
limited had a debt of $6.14 billion and a bridge loan of $2.66 million.
– After the acquisition Tata steel became 5th largest producer of steel in
the world, resulting in increased profitability.
– The deal resulted in synergies between the two entities.
– However, the merger was rated as an expensive merger. But with time
Tata succeeded to gain back the interest of the investors and the
shareholders by showcasing the synergies gained by the merger and the
stock market reacted positively to the deal.
CONCLUSION

– So it can be concluded that because of the high debt deal the

shareholders and the investors were reluctant to the deal but the
synergies of the deal resulted positively for the Tata thus increasing the
share prices and the ratios for the company.
REFERENCE

– https://www.academia.edu/23274876/A_CASE_STUDY_OF_TATA_AND_CORUS_
MERGER