Group2

Sameep Kunja (2011SMN6501)

Anita Singh (2011SMN6504)

Leena Sadhu (2011SMN6538)

Piyush Bajpayee (2011SMN6539)

Souptik Sarkar (2010CEC3850)

Tata-Corus Acquisition

DMS, IIT DelhiCourse : SML730

Organisation Management

Former Name : Tata Iron and Steel Company

Parent : Tata Group

Type : Public BSE (500470)

Founded : 1907

Chairman : Ratan Tata

Industry : Steel

Course : SML730

Organisation Management

DMS. IIT Delhi

Overview of the Acquirer

Founder : Jamshedji Tata

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Headquarter : Jamshedpur, Jharkhand, India

Name : Corus

Parent : Tata Steel, member of Tata Group

Type : Subsidiary

Founded : 1999

CEO : Kirby Adams

Industry : Steel

Course : SML730

Organisation Management

DMS. IIT Delhi

Overview of the Acquired

Formation : Merger of British Steel Corporation & Koninklijke Hoogovens N.V.

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Headquarter : London, England, UK

Course : SML730

Organisation ManagementDMS, IIT Delhi

Reasons for Acquisition

• To tap European mature market

• Cost of acquisition is lower than setting up

green field plant and marketing and

distribution channel.

• Tata manufactures low value long and fast

steel products while Corus produced high

value stripped products

Reasons for Bid from Tata Steel

• Acquisition would help Tata to feature in

top 10 players in the world.

• Technology benefit

• Economies of scale

• Corus held a number of patents and R&D

facilities

Reasons for Bid from Tata Steel

• Saturated market of Europe

• To extend its global reach through Tata

• To get access to low cost Indian Ore

reserves

• Decline in market share and profit

• Total debt of Corus was 1.6 Bn GBP

• Facilities were old with high cost of

production

Reasons From Corus to accept the

Tata Bid

Course : SML730

Organisation ManagementDMS, IIT Delhi

How the Acquisition was Implemented

• Tata acquired Corus on 2nd April 2007

• The deal price was US $ 12.11 Billion

• On 17th Oct 2006 Tata bid was priced at 403

pence per share (Market Price per share at that

time was 390 pence)

• Tata Steel winner of the auction for Corus

declares a bid of 608 pence per share

• Tata surpassed the financial bid from Brazilian

Steel Maker – COMPAHNIA SIDDERUGGICA

NACIONAL (CSN) – of 603 pence per share

The Tata-Corus DealStatistics

• A holding company was setup by Tata in

Singapore to acquire Corus.

• Idea was to have all foreign acquisitions

under one holding company.

• Singapore has a favorable Tax jurisdiction

and gave Tata Steel an easy avenue for

raising global resources and funds

The Tata-Corus DealInvestment Vehicle

The Tata-Corus Deal

Tata Steel India

Tata Steel Holdings Asia (Singapore)

Tata Steel UK (SPV)

Corus Group Ltd. (UK)

• Appointing Advisors

• Negotiating Terms

• Due Diligence

• Exchange of contracts

• Completion

The Tata-Corus DealProcess of Acquisition

Ratan Tata – Chairman of Tata Steel on Acquisition

“This proposed acquisition represents a

defining moment for Tata Steel and is

entirely consistent with our strategy of

growth through international expansion.

Corus and Tata Steel are companies with

long, proud histories. We have compatible

cultures of commitment to stakeholders

and complementary strengths in

technology, efficiency, product mix and

geographical spread. Together we will be

even better equipped to remain at the

leading edge of the fast changing steel

industry.”

Course : SML730

Organisation ManagementDMS, IIT Delhi

Was The Merger a Success or a Failure?

The following points can be attributed:

• TATA Steel Group rose to 5th position from 56th

• The production capacity increased from

4million tonnes to 28million tonnes by 2011

• Standard & Poor’s Rating cut it credit Rating to

BB from BBB and removed them from the

negative watch list

Merger – Success or Failure?

• The 150 year old Redcar plant was to be

mothballed costing 1700 jobs – May 2009

• The deal led by Italian steel specialist

Marcegaglia had fallen; which promised to buy

around 78% of Redcar’s production

• The reason attributed to this is unprecedented

fall in demand due to recession in Steel

industry

Union Problems at Redcar’s Teeside Plant

Course : SML730

Organisation ManagementDMS, IIT Delhi

Reasons for Success or Failure?

• Aerospace

• Automotive

• Construction

• Consumer Products

• Defense & Security

• Energy & Power

• Lifting & Excavation

• Packaging

• Rail

Success - Corus’ Diversified Presence

• The 2nd largest

Company of Britain

and one of the

flagship companies

of the Britain’s

infrastructure

industry

• Strong Research & Development Unit

• Several Patent’s to its credit

• Produces high end steel

• Large Customer base

Success - Corus’ R&D Unit

• Big boost to the Indian economy, as TATA was

acquiring a company 3 times its size

• The R&D Unit of Corus complements that of

TATA’s

• Links low cost Indian production and raw

materials and growth markets to high margin

markets and high technology in the West

• Help from financing institutions as $8 billion

was raised through debt

TATA’s Implementation of the Deal

• Tata Steel Stock Price

Statistics

• Tata Steel Europe Stock Price

Statistics

• Net debt fell from $10.43 billion in June, 2010

to $9.13 billion in March, 2011

• Tata Steel Group recorded profit after tax of

Rs5,347 crores in Q1 FY’12, almost three

times the profit of Rs1,825 crores recorded in

Q1 FY’11

Statistics

MERGER - A SUCCESS

Verdict

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