Tata Steel's Acquisition of Corus
|
|
ICMR HOME | Case Studies Collection
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
To download Tata Steel's Acquisition of Corus case study (Case Code:
FINC049) click on the button below, and select the case from the list of available cases:
Price:
For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping &
Handling Charges
» Finance Case
Studies
» Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Case Studies by Industry
» Case Studies by Company
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.
|
|
<< Previous
"The financials for this deal [require] high performance levels, perfect post-deal execution and sustained high steel prices. It is a risky game and will be okay for Tata as long as the economy is growing and no major bumps occur. If [these bumps] do occur, they can become a challenge, and I am reminded of the high leverage days of the mid-1980s."1
- Vivek Gupta, Managing Director, AT Kearney (India), in February 2007.
"Indian steel companies are on a consolidation mode. The Tata-Corus deal has set many records. So far, the only $1 billion-plus deal was done by ONGC, and it's the first milestone for India Inc, with the Tata deal crossing $10 billion mark. It's a landmark deal since an Indian company has taken over an international company three times its size."2
- S. Mukherji, Managing Director, ICICI Securities, in February 2007.
Introduction
|
On January 31, 2007, India based Tata Steel Limited (Tata Steel) acquired the Anglo Dutch steel company, Corus Group Plc (Corus) for US$ 13.70 billion3. The merged entity, Tata-Corus, employed 84,000 people across 45 countries in the world. It had the capacity to produce 27 million tons of steel per annum, making it the fifth largest steel producer in the world as of early 2007 (Refer Exhibit I for the top ten players in the steel industry after the merger). Commenting on the acquisition, Ratan Tata, Chairman, Tata & Sons, said, "Together, we are a well balanced company, strategically well placed to compete at the leading edge of a rapidly changing global steel industry."4
|
|
Tata Steel outbid the Brazilian steelmaker Companhia
Siderurgica Nacional's (CSN) final offer of 603 pence per share by offering
608 pence per share to acquire Corus.
|
|
Tata Steel had first offered to pay 455 pence per share of Corus, to close the deal at US$ 7.6 billion on October 17, 2006. CSN then offered 475 pence per share of Corus on November 17, 2006.
Finally, an auction5 was initiated on January 31, 2007, and after nine rounds of bidding, Steel could finally clinch the deal with its final bid 608 pence per share, almost 34% higher than the first bid of 455 pence per share of Corus.
Many analysts and industry experts felt that the acquisition deal was rather expensive for Tata Steel and this move would overvalue the steel industry world over. |
Tata Steel's Acquisition of Corus
- Next Page>>
|
|
