Tata Steel's Acquisition of Corus
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Case Details:
Case Code : FINC049
Case Length : 27 Pages
Period : 2006-2007
Pub. Date : 2008
Teaching Note : Available
Organization : Tata Steel Limited, Corus Group Plc
Industry : Iron & Steel
Countries : India, Netherlands
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FINC049) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Tata Steel Vs CSN: The Bidding War
There was a heavy speculation surrounding Tata Steel's proposed takeover of Corus ever since Ratan Tata had met Leng in Dubai, in July 2006. On October 17, 2006, Tata Steel made an offer of 455 pence a share in cash valuing the acquisition deal at US$ 7.6 billion.
Corus responded positively to the offer on October 20, 2006.
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Agreeing to the takeover, Leng said, "This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms." In the first week of November 2006, there were reports in media that Tata was joining hands with Corus to acquire the Brazilian steel giant CSN which was itself keen on acquiring Corus. On November 17, 2006, CSN formally entered the foray for acquiring Corus with a bid of 475 pence per share. In the light of CSN's offer, Corus announced that it would defer its extraordinary meeting of shareholders to December 20, 2006 from December 04, 2006, in order to allow counter offers from Tata Steel and CSN...
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Financing the Acquisition
By the first week of April 2007, the final draft of the financing structure of the acquisition was worked out and was presented to the Corus' Pension Trusties and the Works Council by the senior management of Tata Steel. The enterprise value of Corus including debt and other costs was estimated at US$ 13.7 billion (Refer Table I for fund raising mix for the Corus' acquisition)...
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The Integration Efforts
Industry experts felt that Tata Steel should adopt a 'light handed integration'approach, which meant that Ratan Tata should bring in some changes in Corus but not attempt a complete overhaul of Corus'systems (Refer Exhibit XI and Exhibit XII for projected financials of Tata-Corus). N Venkiteswaran, Professor, Indian Institute of Management, Ahmedabad said, “If the target company is managed well, there is no need for a heavy-handed integration. It makes sense for the Tatas to allow the existing management to continue as before... |
Excerpts Contd...>>
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