Tata acquired Corus, which was four times larger than Tata Steel, making it the world's fifth largest steelmaker. The $12 billion acquisition of Corus in 2007 was India's largest foreign takeover at the time. Tata paid 608 pence per share for Corus, 33.6% higher than its initial offer. The acquisition was aimed at giving Tata access to European markets and technology to help it grow and compete globally. However, the combined company struggled in the economic downturn, posting losses in its first year.
Tata acquired Corus, which was four times larger than Tata Steel, making it the world's fifth largest steelmaker. The $12 billion acquisition of Corus in 2007 was India's largest foreign takeover at the time. Tata paid 608 pence per share for Corus, 33.6% higher than its initial offer. The acquisition was aimed at giving Tata access to European markets and technology to help it grow and compete globally. However, the combined company struggled in the economic downturn, posting losses in its first year.
Tata acquired Corus, which was four times larger than Tata Steel, making it the world's fifth largest steelmaker. The $12 billion acquisition of Corus in 2007 was India's largest foreign takeover at the time. Tata paid 608 pence per share for Corus, 33.6% higher than its initial offer. The acquisition was aimed at giving Tata access to European markets and technology to help it grow and compete globally. However, the combined company struggled in the economic downturn, posting losses in its first year.
Tata acquired Corus, which was four times larger than Tata Steel, making it the world's fifth largest steelmaker. The $12 billion acquisition of Corus in 2007 was India's largest foreign takeover at the time. Tata paid 608 pence per share for Corus, 33.6% higher than its initial offer. The acquisition was aimed at giving Tata access to European markets and technology to help it grow and compete globally. However, the combined company struggled in the economic downturn, posting losses in its first year.
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2 TATA-CORUS Tata acquired Corus, which is four 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 and follows Mittal Steel's $31 billion acquisition of rival Arcelor in the same year. Tata acquired Corus on the 2nd of April 2007 for a price of $12 billion. The price per share was 608 pence(rs 484), which is 33.6% higher than the first offer which was 455 pence.
3 We aspire to be the global steel industry benchmark for value creation and corporate citizenship
4 Tata Steel a part of the Tata group, one of the largest diversified business in india. Founded in 1907, by Jamshed Ji Nusserwanji Tata. In feb 2005 acquired singapore based Natsteel Ltd. In dec 2005 acquired thaialand Millennium steel .
5 Indian Steel Industry – An Overview
8th largest steel producer in the world
Production of Finished steel in 2005-06, 42.7 mT, a growth of 11%. Apparent Consumption of Finished Steel in 2005-06 - 38.1mT, growth of 10.8%. Apparent consumption of Longs -16.2 mT, Flats - 21.8 mT. Largest producer of Sponge Iron - 12.8 mT in 2005-06 (a growth of 25%). India’s exports of Finished Steel in 2005-06, 4.4 mT, Imports 3.7 mT Huge Iron Ore reserves – 23 bn. tonnes Private Steel Producers are opting for Forward as well as Backward Integration Indian Steel Producers are increasingly looking for overseas acquisitions in steel as well as raw materials. Indian Steel Industry – An Overview Major Players Finished Steel Production 2005-06 Company 05-06 SAIL (MT) 22% SAIL 9.15 Others Tata Steel 3.8 40% RINL 3.0
RINL ESSAR 3.3
7% ISPAT 2.6 Tata Steel JSWL 3.5 Essar JSWL 9% OTHERS 17.2 8% 8% Ispat Total 42.7 6% 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 system
Operates as an International company Core business in Manufacturing, Development and
Allocation of Aluminum and Steel products and services
Wide variety of products and services Largest steel producer in UK with £10,142 million
annual revenue and work force of 50,000 employees
8 Higher profitability Global No. 5 company By 2012, expected production of 40 million tonnes
giving it the position of Global number 2.
To gain access to global steel market and expand
production capacity to keep pace with growing demand
for steel Jim Leng, Chairman of Corus“This offer from Tata
Steel reflects the substantial value created for Corus
shareholders
9 TATA looking for mature market in Europe for its finished products Corus holds a number of patients and R&D facility. Cost of Acquisition lower than setting up a green field
plant and marketing and distribution channel.
Corus wanted to reduce its employees cost and TATA
is well known for handling its labours efficiently.
10 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.
11 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
12 Seven member team for this DEAL. TATA has to pay $12 billion, where 2/3rd was being financed. 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 tonnes of steel, while CORUS earned $860 million on sales of 18.6 million tonnes of steel. 13 Strength ◦ Lowest cost producer in world. ◦ Experience of TATA group in doing global activity. ◦ Stable balance sheet (Low Debt to Equity Ratio).
Weakness ◦ Corus was triple the size of TATA steel in terms of production.
14 Opportunity ◦ Consolidation trend in Steel Industry ◦ CSN’s lost image after failure of 2002 negotiations ◦ To get exposed to global steel market
Threat ◦ Brazil company CSN ◦ Russian company Severstal ◦ No committed financers to support the possible deal
15 TATA Steel posted a consolidated net loss (including Corus) of Rs 2,209 crore ($461 million). Incurred a profit of Rs 3,901 crore ($814 million ) in the
April-June quarter of FY’09.
Sales volume of Indian operations was higher by 22
percent but sales from its European operations (Corus) fell
heavily. Group consolidated turnover was Rs.23,292 crores as
compared to Rs. 43,496 crores.
16 The merged entity aimed that at transferring European Technology & the expertise of the R&D of CORUS to India to develop new Product & Capture Growth In India & Other Parts of Asia By the Year 2015
Tata stell got access to the developed market of Europe .It
Gives access to developed and mature market of Europe Where Tata can go downstream much more than in India and Chaina and where the quality product & service is important
17 “ 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”
