Upload
faiz-mulla
View
233
Download
0
Embed Size (px)
Citation preview
8/3/2019 General Presentation (MACR)
1/15
8/3/2019 General Presentation (MACR)
2/15
MERGERS & ACQUISITION
8/3/2019 General Presentation (MACR)
3/15
Mergers- A merger is a combination of two companies
into one larger company, which involves stock swap or
cash payment to the target.
Acquisition - When one company takes over another and
clearly establisheditself as the new owner, the purchase
is called an acquisition.
From a legal point of view, the target company ceases toexist, the buyer "swallows" the business and the buyer's
stock continues to be traded.
8/3/2019 General Presentation (MACR)
4/15
WHY?
Gain market share
Economies of scale
Enter new markets
Acquire technology Utilization of surplus funds
Managerial Effectiveness
8/3/2019 General Presentation (MACR)
5/15
PROFILE PRE MERGER
102 years in steel bazaar
Worlds 56th largest
Capacity of 30 Million
Founder:J.N. Tata
Presence in 26 nations
Worlds 6th largest
2nd in Europe,1st in UK
Presence in 50 nations
40,000 people
worldwide.
TATA STEEL CORUS
8/3/2019 General Presentation (MACR)
6/15
Acquisition
Structure
Asset Purchase
Business Purchase
Share Purchase
8/3/2019 General Presentation (MACR)
7/15
Acquisition
TATA-CORUS
Tata acquired Corus, which is four times larger thanits
size and the largest steel producer in the U.K. The
deal, which creates the world's fifth-largeststeelmaker,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.
8/3/2019 General Presentation (MACR)
8/15
Process of Acquisition
Finding A Target Business
Appointing Advisers
Negotiating terms Due Diligence
Exchange of Contracts
Completion
8/3/2019 General Presentation (MACR)
9/15
Negotiation By Tata
September 20, 2006 :Corus Steel has decided to acquire a strategic
partnership with a Company that is a low cost producer
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 doesnt react to Corus andits 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 Steels
bid.
8/3/2019 General Presentation (MACR)
10/15
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
December 18, 2006 :Within hours of Tata Steel increasing its original bid for Corus to500 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.
January 31, 2007:Britain's Takeover Panel announces in an e-mailed statement that
after an auction Tata Steel had agreed to offer Corus investors 608 pence per share
in cash
April 2, 2007:Tata Steel manages to win the acquisition to CSN and has the full voting
support from Corus shareholders
8/3/2019 General Presentation (MACR)
11/15
Financing the Deal
TATA- CORUS Deal - $12 billion
Equity Contribution from Tata Steel- $3.88 billion
Credit Suisse leaded, joined by ABN AMRO and
Deutsche Bank in the consortium.
Of the $ 8.12 billion of financing , Credit Suisse
provided 45% and ABN AMRO and Deutsche
provided 27.5% each.
8/3/2019 General Presentation (MACR)
12/15
WHY CASH DEAL?
Tata Steel's security credit rating was investment
grade whereas Tata Steel UK had a lower security
credit rating.
'share swap' deal less attractive to the Corus
shareholders.
'share swap' would have diluted Tata Steel's equity
base.
8/3/2019 General Presentation (MACR)
13/15
Global Steel Ranking: (Ranking of Tata steel before deal- 55)
Company Capacity (inmillion
tonnes)
Arcelor - Mittal 110.0
Nippon Steel 32.0
Posco 30.5
JEF Steel 30.0
Tata Steel - Corus 27.7
Bao Steel China 23.0
US Steel 19.0
Nucor 18.5
Riva 17.5
Thyssen Krupp 16.5
8/3/2019 General Presentation (MACR)
14/15
Conclusion
With Corus inits fold, Tata Steel can confidently target
becoming one of the top-3 steel makers globally by 2015. The
company would have an aggregate capacity of close to 56
million tones per annum,if all the planned Greenfield capacities
go on stream by then.
We can conclude that if the acquisitions well planned, Executed
and the necessary precautions taken for the deal a company
can achieve its strategic objectives and thus ensure its growththrough Acquisition.
8/3/2019 General Presentation (MACR)
15/15
THANK YOU