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I tried to cover each and every moment that happend during and after the deal.
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By:
Sourabh Soni
TATA & CORUS: A Case Of Acquisition
ObjectivesIntroduction.Indian Steel Market.Global Steel Market : Overview.CORUS Steel Industry.The DEAL.TATA after Acquisition.Conclusion.
IntroductionAcquisition
Mergers
Joint ventures
Why it is needed?
Indian Steel MarketTata steel industry was the first Indian
steel industry established 1907.
It holds an important place in the Indian business history.
Tata started other business in India in a short span of 30 years.
Cont…
Steel industry (heavy industry) is considered as a very influential factor in the modern economy.
India is considered as a major exporter of steel on a world map.
Due to this, antidumping actions has been taken by developed countries.
Global Steel Market : OverviewIISI forecasts 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 Industry 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 systemOperates as an International companyCore business in Manufacturing, Development and
Allocation of Aluminum and Steel products and services
Wide variety of products and servicesLargest steel producer in UK with £10,142 million
annual revenue and work force of 50,000 employees
The DEAL..
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.
Ups and down 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
TATA After AcquisitionSeven member team for this DEAL.TATA has to pay $12 billion, where 2/3rd
was being financed.Immediate effect on TATA.(10.7%)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 tonne of steel, while CORUS earned $860 million on sales of 18.6 million tones of steel.
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”
- Ratan Tata
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