Tata Corus Aquisition

COMPANY’S PROFILE
TATA STEEL
Founded in 1907,by Jamsetji

Nusserwanji Tata.
Tatacompany listed on BSE and
NSE and employs about 82700
(2007) people.
started with a production capacity
of 1,00,000 tones has transformed
into a global giant .
Its revenue in 2005-2006 was 5.0
billion US $.
Ithas a main steel plant located

at Jamshedpur.
The Company also has three

Greenfield steel projects in the
states of Jharkhand, Orissa and
Chhattisgarh.
Global Steel Market :
Overview
IISIforecasts the global steel
demand would be 1.32 billion
tones by 2010.
Much of these demand generated

from India and China
China highest Steel producing

country
Global Steel ranking
Company Capacity(in million tonnes)
Arcelor - Mittal 110
Nippon Steel 32
Posco 30.5
JEF Steel 30
Tata Steel - Corus 27.5
Bao steel China 23
US Steel 19
CORUS STEEL
Corus is Europe's second largest

steel producer.
Corus group was formed on 6th
October 1999.
Company has four divisions: Strip
product , Long product ,
Aluminum and Distribution and
Building system.
Corus main steelmaking
operations primarily in the UK and
the Netherland.
Corus provides innovative
solutions.
Itis listed on London stock
exchange.
VISION
We aspire to be the global steel

industry benchmark for
Value Creation and Corporate
Citizenship
SWOT ANALYSIS
Strengths : Opportunities:
Low Debt to equity ratio. Exposure to global steel

Lowest cost producer in market.
world. Consolidation trend in Steel
TATA group has successfully industry.
acquired some companies in
the past
Weakness Threats
Corus was triple the size of CSN Brazilian bidder.

TATA Severstal Russian bidder.
steel in terms of production No committed financers to
support
the deal .
PRE-MERGER
SCENARIO
CORUS Decides to Sell..(Reasons)
•Total debt of Corus was 1.6 billion GBP.
•Corus needs supply of raw material at lower
cost.
•Though Corus has revenues of $ 18.06
billion, its profit was just $ 626 million (Tata’s
revenue was $4.84 billion and profit $ 824
million)
•Corus facilities were relatively old with high
cost
of production.
TATA decides to Bid- (Reasons)
•Manufacture products in markets of Europe.

•Tata manufactured low value long and flat
steel
products.
•Diversified Product Mix.
•Cost of Acquisition lower.
•Efficient handling of labour.
•Already established business in India.
•From 55th in world to 5th in production of steel
CHALLENGES FOR TATA’s
•Working in matured
market.
•Maintaining low cost.
•High Steel prices

threat.
•Rivals.
THE DEAL
ABOUT THE DEAL
TATA Acquired CORUS on 2nd April 2007 which is

4 times larger than its size.
TATA Steel ,the winner of the auction for CORUS

declares a bid of 608 Pence per share.
The deal price was $ 12 Billion.

In 2005 when the deal was started the price per
share was 455 pence.
TATA emerged as the winner in the final bid from

Brazilian steel maker ‘COMPANHIA
SIDERURGICA NACIONAL’ (CSN) of 603
pence per share.
The combined entity has become the world’s fifth

largest steelmaker.
TATA CORUS FUNDING PATTERN
For this deal TATA has finance only 4 Billion $

from internal company resources.
TATA Have secured funding commitments from its
advisors.
These advisors were Deutshe bank,ABN Amro and
Standard Chartered.
IMPORTANCE OF DEAL
FOR TATA
The initial motive behind the deal was not CORUS

revenue size but rather its market value.
To compete on global scale because then TATA was
just at 56th rank in steel production.
To get access to CORUS technology as well as its
production site.
FOR CORUS
TATA was the lowest cost steel producers.
Due to tough competition with Arcelor-Mittal.
High quality developed and low cost high growth

market.
Transfer of technology.
SYNERGIES BETWEEN TWO CO.
 Tata was one of the lowest cost steel
producer & Corus trying to keep production
cost under the control
 Tata had strong retail network in India and
SE.
 It will give the corus road into the emerging
Asian market
 Strong culture fit and similar work practice
emphasizes on continuous improvement
PROCESS OF DEAL
 September 20, 2006 : Corus Steel has
decided to acquire a strategic partnership
with a Company that is a low cost producer
 October 5, 2006 : The Indian steel giant,
Tata Steel wants to fulfill its ambition to
Expand its business further.
 October 6, 2006 : The initial offer from
Tata Steel is considered to be too low both
by Corus and analysts.
 October 17, 2006 : Tata Steel has kept its
offer to 455p per share.
 October 18, 2006 : Tata still doesn’t react to
Corus and its bid price remains the same.
 October 20, 2006 : Corus accepts terms of ₤ 4.3
billion takeover bid from Tata Steel
 October 23, 2006 : The Brazilian Steel Group
CSN recruits a leading investment
 bank to offer advice on possible counter-offer to
Tata Steel’s bid.
 October 27, 2006 : Corus is criticized by the
chairman of JCB, Sir Anthony Bamford, for its
decision to accept an offer from Tata.
 November 3, 2006 : The Russian steel giant
Severstal announces officially that it will not make
a bid for Corus
 November 18, 2006 : The battle over Corus
intensifies when Brazilian group CSN approached
the board of the company with a bid of 475p per
share
 November 27, 2006 : The board of Corus
decides that it is in the best interest of its will
shareholders to give more time to CSN to
satisfy the preconditions and decide whether
it issue forward a formal offer
 December 18, 2006 : Within hours of Tata
Steel increasing its original bid for Corus to
 500 pence per share, Brazil's CSN made its
formal counter bid for
 Corus at 515 pence per share in cash, 3%
more than Tata Steel's Offer.
 JAN 31,2007:Britain’s takeover panel
announces in an emailed statement that
after an auction Tata steel had agreed to
offer Corus investors 608p.in cash.
 APRIL 2,2007: TATA ACQUIRED CORUS.
SWOT ANALYSIS
STRENGTHS
 Big impact globally

 Facing Competition
 Producing good quality at low price.

WEAKNESS
 EBITDA Ratio
 Requires high level of integration
 Uncertainties in market condition

OPPORTUNITIES
 Pricing power
 Strong research & technology development
 Market Capitalization
THREATS
 Capacity addition by other countries

 Business performance of Corus
 Size of the company

CONCLUSION
“ 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”

Tata Corus Aquisition

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COMPANY’S PROFILE

Founded in 1907,by Jamsetji

Ithas a main steel plant located

The Company also has three

Much of these demand generated

China highest Steel producing

Arcelor - Mittal 110

Tata Steel - Corus 27.5

Bao steel China 23

Corus is Europe's second largest

We aspire to be the global steel

Low Debt to equity ratio. Exposure to global steel

Corus was triple the size of CSN Brazilian bidder.

•Manufacture products in markets of Europe.

•Maintaining low cost.

•High Steel prices

TATA Acquired CORUS on 2nd April 2007 which is

TATA Steel ,the winner of the auction for CORUS

The deal price was $ 12 Billion.

TATA emerged as the winner in the final bid from

The combined entity has become the world’s fifth

For this deal TATA has finance only 4 Billion $

The initial motive behind the deal was not CORUS

TATA was the lowest cost steel producers.

Due to tough competition with Arcelor-Mittal.

High quality developed and low cost high growth

 Big impact globally

 Producing good quality at low price.

 Uncertainties in market condition

 Capacity addition by other countries

 Size of the company

“ I believe this will be the first

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