Roll No. 34- Amit Chaturvedi

8/7/2019 Roll No. 34- Amit Chaturvedi

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Law as an instrument of industrys

interface with prosperity.With Regards to Take over codes of company, Amalgamation ,Merger & Acquisition

Mergers and Acquisitions, Motives behind M&A, Legal Laws applicable to M&A with case study

of Tata Steels Acquisition of Corus PLC.

Amit

12/12/2010



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Certificate

I, Nadirshaw K. Dhondy, advocate Supreme Court, have examined the thesisof Mr. Amit Chaturvedi, who is enrolled at Prin. L. N. Wellingkar Institute of Management and Research in batch ³Post Graduate Program in ManagementStudies ± 16´ for the academic year 2010 ± 12 at unique ID No. 34.

He has completed his thesis entitled ³Law as an instrument of industry¶sinterface with prosperity´ in part fulfilment of final examination

And has been rate to receive _____ marks out of 40

12 th day of December 2010

Amit Chaturvedi

Roll No. ± 34

Batch ± 16

Nardishaw K. Dhondy

Advocate Supreme Court and

Director Special Project.



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Acknowledgment

Any accomplishment requires the effort of many people and this work isnot different. I would like to take the opportunity to thank all those people who have been helpful and spent their time and shared their knowledge for helping me to complete my thesis with the best possibleresult.

First of all, I would like to thank my professor, Nadirshaw K. Dhondy, withouthis invaluable guidance this thesis would surely have not been the same. Thanksfor your time, energies, enthusiasm and advices, for helping me throughout the project and also simply for being such good professor. It has been a great pleasure for me attending your lectures and to have a chance to interact withyou, thanks for everything!

I would like to take this opportunity o thank my family: my parents for all their

support and guidance which made this possible.

I also thank my friends for providing support and friendship that I needed. Iwould like to thank you all for being supportive throughout my time and for helping me with proofreading my project

Lastly, I offer my regards and blessings to all of those who supported me in anyrespect during the completion of this project.



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Prologue

Mergers and acquisitions all through the globe have become universal practices in the corporate world covering different sectors within the nationsand across their borders for securing survival, growth expansion andglobalization of the enterprise and achieving multitude of objectives.

Companies appear to use a number of different definitions of success andfailure, leading to very different conclusions. Consider, for example, theabundance of studies about mergers and acquisitions. Many of them claimthat most acquisitions fail, and this idea has become a mantra across the business world. Despite warnings, hundreds of companies undertakeacquisitions every year. Are these businesses foolish, or merely affected byhubris?

On the more positive side Mergers & Acquisitions may be critical for the

healthy expansion and growth of the firm. Successful entry into new productand geographical markets may require Mergers & Acquisitions at some stagein the firm's development.

On the Indian scene, corporates are seriously looking at mergers &acquisitions which have indeed become the order of the day.

The liberalized economic policies have exposed Indian industry to severalchallenges. In response to this, the Indian economy has witnessed a sharpincrease in mergers and acquisitions.

In this thesis we are going to discuss about mergers, acquisition, takeovers;Companies code and the legal formalities undertaken in the acquisition process with respect to the Acquisition of Corus PLC by TATA Steel which became the 5th largest steel producer in the world after acquiring Corus.



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Case Study Index

Acquisition of Corus PLC by Tata Steel Ltd (Tata Steel).

January 31, 2007.

One of the leading steel producers in India acquired the Anglo Dutch steel producer Corus Group Plc (Corus) for US$ 12.11 billion (¼ 8.5 billion).



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Case Study

Mergers and acquisitions are a big part of the corporate finance world. Everyday, investment bankers arrange M&A transactions, which bring separatecompanies together to form larger ones. When they're not creating bigcompanies from smaller ones, corporate finance deals do the reverse and break up companies through spin-offs, carve-outs or tracking stocks. Notsurprisingly, these actions often make the news. Deals can be worth hundredsof millions, or even billions, of dollars or rupees. They can dictate thefortunes of the companies involved for years to come and help the industry togrow and prosper.

Once we know the different ways in which these deals are executed, we'llhave a better idea of whether you should cheer or weep when a company youown buys another company - or is bought by one.

Mergers, amalgamations, consolidations, acquisitions and takeovers are some

of the terms which are required to be understood in the sense these are usedand after that we will study about one of the biggest deal in India history.



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1. Merger:

Merger is defined as a combination of two or more companies into a singlecompany where one survive and the others lose their corporate existence. Thesurvivor acquires the assets as well as liabilities of the merged company or companies. Generally, the company which survives is the buyer which retainsits identity and the seller company is extinguished. Merger is also defined asamalgamation.

Merger is also defined as amalgamation. Merger is the fusion of two or moreexisting companies. All assets, liabilities and the stock of one company standtransferred to Transferee Company in consideration of payment in the formof:

(i) Equity shares in the transferee company,

(ii) Debentures in the transferee company,

(iii) Cash, or

(iv) A mix of the above mode

Example: Ashok Leyland LTD acquired / absorbed Ductron Castings Limited

2. Amalgamation:

Ordinarily amalgamation means merger. However, Halsbury¶s Laws of England describes amalgamation as a blending of two or more existingundertakings into one undertaking, the shareholders of each blendingcompany becoming substantially the shareholders in the company which is tocarry on the blended undertaking.

Madras High Court held in W. A. Beardsell & Co. Pvt. Ltd . that the wordamalgamation has not been defined under the Companies Act, 1956.AndhraPradesh High Court held in S. S. Somayajulu Vs. Hope Prudhomme & Co. that the word amalgamation has no definite legal meaning. It contemplates a

state of things under which two companies are so joined as to form a thirdentity.



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3. Consolidation:

Consolidation is known as the fusion of two existing companies into a newcompany in which both the existing companies extinguish. Thus,consolidation is mixing up of two or more companies to make them into anew one in which both the existing companies lose their identity and cease toexist. There is no designation of buyer and seller. All consolidatingcompanies are dissolved. Consideration of payment is in terms of equityshares or bonds or cash or a combination of two or all modes of payments in proper mix.

Example: Hindustan Computers Ltd, Hindustan Instruments Ltd, IndianSoftware Company Ltd, and Indian Reprographics Ltd combined to formHCL Ltd.

4. Acquisitions

Acquisition in general sense is acquiring the ownership in the property. In thecontext of business combinations, an acquisition is the purchase by onecompany of a controlling interest in the share capital of another existingcompany. An Acquisition may be affected by

(a) Agreement with the persons holding majority interest in the companymanagement like members of the board or major shareholders commandingmajority of voting power;

(b) Purchase of shares in open market;

(c) To make takeover offer to the general body of shareholders;

(d) Purchase of new shares by private treaty;

(e) Acquisition of share capital of one company may be by either all or anyone of the following form of considerations viz. means of cash, issuance of loan capital, or insurance of share capital.

5. Takeover

A takeover is acquisition and both the terms are used interchangeable. Takeover differs from merger in approach to business combinations i.e. the process of takeover, transaction involved in takeover, determination of theshare exchange or cash price and the fulfillment of goals of combination allare different in takeovers than in mergers. For example, process of takeover is unilateral and the offer or company decides about the maximum price.Time taken in completion of transaction is less in takeover than in mergers,top management of the offeree company being more co -operative.



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TYPES OF MERGERS

From the perspective of business structures, there is a whole host of differentmergers. Here are a few types, distinguished by the relationship between thetwo companies that are merging:

Horizontal merger - Two companies that are in direct competition and

share the same product lines and markets.

Vertical merger - A customer and company or a supplier and company.Think of a cone supplier merging with an ice cream maker.

Market-extension merger - Two companies that sell the same products indifferent markets.

Product-extension merger - Two companies selling different but related products in the same market.

Conglomeration - Two companies that have no common business areas.There are two types of mergers that are distinguished by how the merger isfinanced. Each has certain implications for the companies involved and for investors:

Purchase Mergers - As the name suggests, this kind of merger occurswhen one company purchases another. The purchase is made with cash or through the issue of some kind of debt instrument; the sale is taxable.Acquiring companies often prefer this type of merger because it can provide them with a tax benefit. Acquired assets can be written-up to theactual purchase price, and the difference between the book value and the purchase price of the assets can depreciate annually, reducing taxes payable by the acquiring company. We will discuss this further in partfour of this tutorial.

Consolidation Mergers - With this merger, a brand new company isformed and both companies are bought and combined under the newentity. The tax terms are the same as those of a purchase merger.

R everse merger- It is a merger of a profit making company into a lossmaking company. There is no difference between a regular merger and areverse merger however if one of the merging company is a sick companyunder sick industrial company act then such merger should take placethrough the board of BIFR. The transferee co gets the benefits of taxconcessions and rebate under the income tax act.



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TYPES OF ACQUISITIONS 1. Share purchases - in a share purchase the buyer buys the shares of the target

company from the shareholders of the target company. The buyer will takeon the company with all its assets and liabilities.

2. Asset purchases - in an asset purchase the buyer buys the assets of the targetcompany from the target company. In simplest form this leaves the targetcompany as an empty shell, and the cash it receives from the acquisition isthen paid back to its shareholders by dividend or through liquidation.However, one of the advantages of an asset purchase for the buyer is that itcan "cherry-pick" the assets that it wants and leave the assets - andliabilities - that it does not. This leaves the target in a different position after the purchase, but liquidation is nevertheless usually the end result.

The main difference between a merger and an acquisition is how they arefinanced.

Mergers are often financed by a stock swap, in which the owners of stock in both companies receive an equal quantity of stock in the new company.Mergers are also known as "merger of equals," meaning that both companiesare about equivalent. On the other hand, the term "acquisition" is used torefer to two unequal companies becoming one (one is bigger than the other).Financing can involve cash and debt combination, all cash, stocks or other

equity of the company.

Methods of Acquisition:

An acquisition may be affected by

(a) agreement with the persons holding majority interest in the companymanagement like members of the board or major shareholderscommanding majority of voting power;

(b) purchase of shares in open market;(c) to make takeover offer to the general body of shareholders;(d) purchase of new shares by private treaty;(e) Acquisition of share capital through the following forms of

considerations

Viz. means of cash, issuance of loan capital, or insurance of sharecapital.



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MOTIVES AND FACTORS OF MERGERS AND ACQUISITIONS.

The factors behind M&A are to diversify the areas of activity, to achieveoptimum size of business, improve profitability, serve the customer better,economies of scale, acquire assets at lower than the market price, nurse a sick unit, get tax advantage by acquiring the running concern.

1. Economies of scale:

The operating cost advantages in terms of economies of scale are consideredto be the primary motive for merger. Be it horizontal or vertical merger.These results in slower average cost of production and higher sales, due tohigher level of operations. For instance, overheads cost can be substantiallyreduced on accounts of sharing central services such as, accounting &finance, office, executive & top level manage ment, the legal, sales promotions and so on.

At operational terms, real economies may arise from:

A. Production activity of the firmB. Research and development activityC. Marketing and distribution activityD. Transport, storage and inventories, andE. Managerial economies

Pecuniary economies ± cheaper finance is the most vital ingredient of pecuniary economy. A most merger firm, being larger in size, is likely to

raise finance at cheaper/lower rates. The reason is that the larger the size of the firm the more secure the investors consider their funds, resulting in lower risk of default. Besides, floatation cost per unit decreases with increase in thesize of shares and debentures.

2. SYNERGY: -The simplest rationale is the under valuation of the targetfirm. An undervalued firm will be a target for acquisition by other firms.However the fundamental motive for the acquiring firm to take over thetarget firm may be to desire to increase the wealth of the shareholders of theacquiring firm.

This is possible only if the value of the new firm is expected to be more thanthe sum of the value of the target firm and the acquiring firm.

When two firms combines their resources and efforts they will be able to produce better results than they were producing as separate entities becauseof saving in various types of operating costs, for instance, one firm may havestrong R&D team where as other may have very efficient productiondepartment.



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Synergy results from complimentary activities, e.g., one firm may havesubstantial financial resources while the other has profitable investmentopportunities. Likewise, one firm may be strong in RD, whereas the other firm may have a very efficient production department. Similarly, onecompany may have well-established brands but lack marketing organization,and another firm may have a very strong marketing organization. The merged

concern in all these cases will be more efficient than the individual firms.Also, a post-merger firm is likely to raise finances at lower rates than that atwhich either of the pre-merger constituents could have acquired them, as it is

perceived to be more secure.

Mergers & Acquisition synergies include both tangible and intangible assets

y Corporate brands and well-defined reputation;

y Capital and new streams of revenue;

y Core competencies in management or business processes;

y People who possess unique skill or customer relationships;

y Needed elements of a culture or operating environment

y Management resources.

Many of these assets are people based. Employees at every level of anorganization help to forge a corporate brand identity and reputation.Employees help to create new streams of revenue by being close to themarket place and recognizing new op portunities. Leaders use variousresources to mobilize people¶s energies towards a set of strategic goals.Talented people contribute their expertise within a supportive and enablingcorporate culture.

People based assets are difficult to manage it is not a simple task to harness peoples intellects, emotions and imaginations. Nor is it a easy to persuadeemployees to behave in certain ways or to endorse cherished corporatevalues.

3. FAST GROWTH: Mergers often enable the new firm to grow at a faster rate than via the internal expansion route through its own capital budgeting proposals. The reason is that the acquiring company enters a new marketquickly, and avoids the delay associated with building a new plant and

establishing new products.



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4. TAX BENEFITS: Income tax act 1961 is vital among all tax laws, whichaffect the mergers of firms from the point of view of tax savings liabilities.However the benefits under this act are available only if the followingconditions mentioned in sec.2 (1B) of the act are fulfilled:

1. All the amalgamating company should be company within the meaning of the sec.2 (17) of the income tax act 1961.

2. All the properties of the amalgamating co (i.e. the target firm) should betransferred to amalgamated co. (i.e. the acquiring co.)

3. All the liabilities of the amalgamating co. should become the liability of the amalgamated co.

4. The shareholders of not less than 90% of the share capital of theamalgamating co. should become the shareholders of amalgamated co.

If a healthy company acquires a sick one, it can avail of income tax benefitsunder section 72-A of Income Tax Act. This stipulates that subject to themerger fulfilling certain conditions, the healthy company¶s profit can be set

off against the accumulated losses of the sick unit. The money saved thusmust be used for the revival of the sick unit. For instance, the existingcreditors of the sick unit may be paid off. The healthy company, besidessaving on tax, acquires additional manufacturing capacities and strengths.

5. DIVER SIFICATION: A merger between two unrelated firms would tendto reduce business risk, which in turn reduces the discount rate/required

rate of the firm¶s earnings, thus increasing its market value. In other words, such mergers help stabilize overall corporate incomes which wouldotherwise fluctuate.

6. ACQUISITION OF BR AND NAMES, PATENT R IGHTS ETC.: Atakeover or merger may be a relatively easy way of acquiring established brand names, valuable patent rights, technical know-how etc.

7. DEPLOYMENT OF SUR PLUS FUNDS: A profit-making company mayhave surplus funds that it is not in a position to invest profitably. In the present context, many of the companies having a good track record areapproaching the capital market for raising resources. Funds are being raised by issuing shares and debentures at a substantial premium, enabling the

reduction of average capital cost. At the same time there are companies thatare starved of funds due to expansion programs, developmental work or someother reasons.



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8. EAR NING PER SHAR E: Increasing the EPS of the company can also beone of the motive for a merger. A firm can increase its EPS by acquiringanother firm, which is profitable and has a low P/E ratio. However anincrease in EPS need not necessarily increase the market price of the share.The firm with a lower P/E ratio might be a lower growth firm and thereforeafter merger the investor may not be willing to pay a higher price for new

firm.

9. AVOIDING CUT-THROAT COMPETITION: A merger/takeover routemay enable companies to avoid competition in a situation where there are toomany players targeting a limited market. E.g., VIP took over UniversalLuggage and put an end to the massive price discounting, which was eatingup their profits.



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LEGAL PROCEDURES FOR MERGER AND ACQUISITIONS

1. Laws applicable to Acquisition

1. Clauses 40A and 40B of the listing Agreement the company has entered

into with stock exchange

2. SEBIs (Substantial Acquisition of shares and Takeovers) Regulations, 1997.

1. Takeover and Listing agreement exemption Clauses 40A and 40B of

Listing Agreement

Clause 40A deals with substantial acquisition of shares and requires the offer or and the offeree to inform the stock exchange when such acquisition resultsin an increase in the shareholding of the acquirer to more than 10%.

Clause 40B deals with takeover efforts. A takeover offer refers to change inmanagement where there is no change in management, Clause 40B of listingagreement will not apply. However, sub clause 13 of amendment of Clause40B also provides an exemption to the scheme approved by BIFR. There is no provision under clause 40B for exemption of non BIFR companies.



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2. SEBI (Substantial Acquisition of shares and takeover) Regulations Act,

1997

On the basis of recommendations of the Committee, the SEBI announced onFebuary20, 1997, the revised take-over code as Securities and Exchange Boardof India (Substantial Acquisitions of shares and Takeovers) Regulations, 1997.

The objective of these regulations has been to provide an orderly framework within which substantial acquisitions and takeovers can take place. The salientfeatures of this new takeover code (Regulations, 1997) may be enumerated asfollows:

i.Any person, who holds more than 5% shares or voting rights in any company,shall within two months of notification of these Regulation disclose hisaggregate shareholding in that company, to the company which in turn, shalldisclose to all the stock exchanges on which the shares of the company arelisted, the aggregate number of shares held by each such person.

ii.Any acquirer, who acquires shares or voting rights which (taken together withshares or voting rights, if any, held by him) would entitle him to more than 5%shares or voting rights in a company- (a) in pursuance of a public issue, or (b) by one or more transactions, or (c) in any other manner not covered by (a) and(b) above, shall disclose the aggregate of his shareholding or voting rights inthat company, to the company within four working days of the acquisition of shares or voting rights, as the case may be.

iii.Every person, who holds more than 10% shares or voting rights in any

company, shall, within 21 days from the end of the financial yea, make yearlydisclosures to the company, in respect of his holdings as on 31 st March eachyear.

iv. No acquirer shall agree to acquire, of acquire shares or voting rights which(taken together with shares or voting rights, if any, held by him or by personsacting in concert with him), entitle such acquirer to exercise 10% or more of the voting rights in a company, unless such acquirer makes a publicannouncement to acquire shares of such company in accordance with theRegulations.

v. No acquirer holding, not less than 10% but not more than 25% of the shares or voting rights in a company, shall acquire, additional shares or voting rightsentitling him to exercise more than 2% of the voting rights, in any period of 12months, unless such acquirer makes a public announcement to acquire sharesin accordance with the Regulations.



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vi.The minimum offer price shall be the highest of- (a) the negotiated price under the agreement ; (b) average price paid by the acquirer for acquisitionsincluding by way of allotment in a public or rights issue, if any, during the

twelve-month period prior to the date of public announcement; (c) the price paid by the acquirer under a preferential allotment made to him, at any timeduring the twelve month period up to the date of closure of the offer; (d) the

average of the weekly high and low of the closing prices of the shares of thetarget company during the 26 weeks preceding the date of publicannouncement.

vii.The public offer shall be made to the shareholders of the target company toacquire from them an aggregate minimum of 20% of the voting capital of thecompany provided that acquisition of shares from each of the shareholdersshall not be less than the minimum marketable lot or the entire holding if it isless than the marketable lot.

viii.Within 14 days of the public announcement of the offer, the acquire must senda copy of the draft letter to the target company at its registered office address,for being placed before the Board of Directors and to all the stock exchangeswhere the shares of the company are listed.

ix.Any person other than the acquirer who had made the first publicannouncement, who is desirous of making any offer, shall, within 21 days of the public announcement of the first offer, make a public announcement of hisoffer for acquisition of some or all of the shares of the same target company.Such offer shall be deemed to be a competitive bid. No public announcementfor an offer or competitive bid shall be made during the offer period exceptduring 21-day period from the public announcement of the first offer.

x.Upon the public announcement of a competitive bid or bids, the acquir er(s)who had made the public announcement (s) of the earlier offer(s), shall havethe option to make an announcement revising the offer or withdrawing theoffer with the approval of the SEBI.

xi.Irrespective of whether or not there is competitive bid, the acquirer who hasmade the public announcement of offer, any make upward revisions in his offer in respect of the price and the number of shares to be acquired, at any time up

to 3 working days prior to the date of the closure of the offer.

xii. No public offer, once made, shall be withdrawn except under the circumstancesmentioned in this regulation, namely-(a) the withdrawals is consequent uponany competitive bid; (b) the offer did not receive the minimum level of acceptances, to which it was subject to; (c) the statutory approvals(s) required



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have been refused; (d) the sole acquirer, being a natural person has died, and

(e) such circumstances as in the opinion of SEBI merits withdrawal.

xiii.The acquirer shall deposit in an Escrow Account a sum equivalent to at least25% of the total consideration payable under the offer up to Rs, 100 Crores and

10% of the consideration thereafter. Where the acquirer specifies a minimumlevel of acceptance and does not want to acquire a minimum 20%, the 50% of the consideration payable is to be deposited in Escrow Account.

xiv.In case, there is any upward revision of offer, consequent upon a competitive bid or otherwise, the value of the Escrow Account shall be increased to equalto at least 25% of the consideration payable upon such revision.

xv.In case of a substantial acquisition of shares in financially weak company not being a sick industrial company, the scheme prepared by a financialinstitutions may provide for acquisition of shares in the financially weak company in any of the following manner (a) outright purchase of shares, or (b)exchange of shares, or (c) a combination of both; provided that the scheme asfar as possible may ensure that after the proposed acquisition, the erstwhile promoters do not own any shares in case such acquisition is made by the new promoters pursuant to such scheme.

xvi.The person acquiring shares from the promoters of the persons in- charge of the management of the affairs of the financially weak company or the financialinstitutions shall make a public announcement of his intention for acquisitionof shares from the shareholders of the company. Such public announcementshall contain relevant details about the offer including the information about

the identity and background of the person acquiring shares, number and percentages of shares proposed to be acquired, offer price, the specified date,the date of opening of the offer and the period for which the offer shall be keptopen.

xvii. No person shall make a competitive bid for acquisition of shares of thefinancially weak company once the lead institution has evaluated the bid andaccepted the bid of the acquirer who has made the public announcement of

offer acquisition of shares from the shareholders other than the promoters.



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An amendment to the Regulations, 1997 on substantial acquisition of sharesand takeovers has been notified on 28, 1998. SEBI had decided to increase thecreeping acquisition limited to 5% from the 25 and the thresh hold limit to215% from 10%. The rationale for SEBI¶s decision to increase the creepinglimit and the threshold limit is difficult to understand. The decision to increase

the creeping to 5% and thresh hold limit to 15% appears to be working againstthe basic spirit of the takeover code. The increase in creeping acquisition will bring in quiet acquisition without the trigger of making a minimum offer of

20%. In fact the 20% offer was to facilitate the market movements and

competitive process and also to keep the management on their toes. Thedecision to increase the creeping acquisition from 2%to 5% disregards theobjective of protection of small shareholders. The decision to increase thethreshold limit from 10% to 15% is also difficult to be justified.



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2. Laws governing merger

Various Laws governing merger in India are as follows:

1. Indian Companies Act, 1956

This has provisions specifically dealing with the amalgamation of a companyor certain other entities with similar status. The most common form of merger involves as elaborate but time-bound procedure under sections 391 to 396 of the Act.

Powers in respect of these matters were with High Court (usually calledCompany Court). These powers are being transferred to National CompanyLaw Tribunal (NCLT) by companies (second Amendment) Act, 2002.

The Compromise, arrangement and Amalgamation/reconstruction require

approval of NCLT while the sale of shares to Transferee Company does notrequire approval of NCLT.

Sec 390 This section provides that ³The expression µarrangement¶ includes areorganization of the share capital of the company by the consolidation of shares of different classes, or by the division of shares into shares of differentclasses, or by both these methods´

Sec 390(a) As per this section , for the purpose of sections 391 to393,¶Company¶ means any company liable to be wound up under the Act.

Sec 390(b) - As per this section, Arrangement can include reorganization of share capital of company by consolidation of shares of different classes or bydivision of shares of different classes.

Sec 390(c) - As per this section, unsecured creditors who have filed suits or obtained decrees shall be deemed to be of the same class as other unsecuredcreditors. Thus, their separate meeting is not necessary.

Sec 391 This section deals with the meeting of creditors/members and NCLT¶s sanction to Scheme.

If majority in number representing at least three-fourths in value of creditors or members of that class present and voting agree to compromise or arrangement,the NCLT may sanction the scheme. NCLT will make order of sanctioning thescheme only if it is satisfied that company or any other person who has madeapplication has disclosed all material facts relating to the company, e.g. latestfinancial position, auditor¶s report on accounts of the company, pendency of



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investigation of company etc. NCLT should also be satisfied that the meetingwas fairly represented by members/creditors.

Sec 391(1) As per this sub-section, the company or any creditor or member of a company can make application to NCLT. If the company is already under liquidation, application will be made by liquidator. On such application, NCLTmay order that a meeting of creditors or members or a class of them be calledand held as per directions of NCLT.

Sec 391 (2) - As per this sub-section, if NCLT sanction, it will be binding onall creditors or members of that class and also on the company, its liquidator and contributories.

Sec 391(3) As per this sub-section, Copy of NCLT order will have to be filledwith Registrar of Companies.

Sec 391(4) As per this sub-section, A copy of every order of NCLT will be

annexed to every copy of memorandum and articles of the company issuedafter receiving certified copy of the NCLT order.

Sec 391(5) In case of default in compliance with provisions of section 391(4),company as well as every officer who is in default is punishable with fine up toRs 100 for every copy in respect of which default is made.

Sec 391(6) After an application for compromise or arrangement has been madeunder the section, NCLT can stay commencement of any suit or proceedingsagainst the company till application for sanction of scheme is finally disposed

of.

Sec 391(7) - As per this sub-section, Appeal against NCLT order can be madeto National Company Law Appellate Tribunal (NCLAT) where appeals againstoriginal order the NCLT lies.

Sec. 392 - This section contains the powers of NCLT to enforce compromiseand arrangement

Sec 392 (1) - As per this section, where NCLT sanctions a compromise or arrangement, it will have powers to supervise the carrying out of the scheme. It

can give suitable directions or make modifications in the scheme of compromise or arrangement for its proper working.

Sec 392 (2) - As per this section, if NCLT finds that the scheme cannot work,it can order winding up.

Sec 393 - This section contains the rules regarding notice and conduct of meeting.



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Sec.393 (1) Where a meeting of creditors or any class of creditors, or of numbers or any class of members, is called under section 391:-

a) With every notice calling the meeting which is sent to a creditor or member,there shall be sent also a statement setting forth the terms of the compromise or arrangement and explaining its effect, and in particular stating any materialinterests of the directors, managing directors, or manager of the company,whether in their capacity as such or as members or creditors of the company or otherwise and the effect on those interests of the compromise or arrangementif, and in so far as, it is different from the effect on the like interests of other person, and

b) In every notice calling the meeting which is given by advertisement, thereshall be included either such a statement as aforesaid or a notification of the place at which creditors or members entitled to attend the meeting may obtaincopies of such a statement as aforesaid.

Sec 393 (2) As per this sub-section, if the scheme affects rights of debentureholders, statement should give details of interests of trustees of any deed for securing the issue of debentures as it is required to give as respects thecompany¶s directors.

Sec 393 (3) - As per this sub-section, the copy of scheme of compromise or arrangement should be furnished to creditor/member free of cost.

Sec 393 (4) Where default is made in complying with any of the requirementsof this section, the company and every officer of the company who is in

default, shall be punishable with fine which may extend to Rs. 50,000 and for the purpose of this sub-section any liquidator of the company and any trusteeof a deed for securing the issue of debentures of the company shall be deemedto be an officer of the company.

Provided that a person shall not be punishable under this sub-section, if heshows that the default was due to the refusal of any other person, being adirector, managing director, manager or trustee for debenture holders, tosupply the necessary particulars as to his material interests.

Sec 393 (5) As per this section, any director, managing director, manager or trustee of debenture holders shall give notice to the company of mattersrelating to himself which the company has to disclose in the statement, if heunable to do so, he is punishable with fine up to Rs.5,000.

Sec 394 This section contains the powers while sanctioning scheme of reconstruction or amalgamation.



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Sec 394(1) NCLT can sanction amalgamation of a company which is beingwound up with other company, only if Registrar of Companies (ROC) hasmade a report that affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest.

Sec 394 (2) As per this sub-section, if NCLT issues such an order, NCLT candirect that the property will be vest in the transferee company and that thetransfer of property will be freed from any charge.

Sec 394 (3) - As per this sub-section, Copy of NCLT order shall be filed withRegistrar within 30 days. In case of default, company as well as every officer who is in default is punishable with fine up to Rs.500.

Sec 394A - As per this section, if any application is made to NCLT for sanction of arrangement, compromise, reconstruction or amalgamation, noticeof such application must be made to Central Government. NCLT shall take intoconsideration any representation made by Central Government before passing

any order.

Sec 395 This section provides that reconstruction or amalgamation withoutfollowing NCLT procedure is possible by takeover by sale of shares. Sellingshareholders get either compensation or shares of the acquiring company. This procedure is rarely followed, as sanction of shareholders of at least 90% of value of shares is required, and not only of those attending the meeting. This procedure can be followed only when creditors are not involved inreconstruction and their interests are not affected.

Sec 395(1) As per this sub-section, the transferee company has to be givenotice in prescribed manner to dissenting shareholder that it desires to acquirehis shares. The transferee company is entitled and bound to acquire thoseshares on the same terms on which shares of approving share holders are to betransferred to the transferee company. The dissenting shareholder can makeapplication within one month of the notice to NCLT. The NCLT can order compulsory acquisition or other order may be issued.

Sec 395(2) As per this sub-section, if the transferee company or its nomineeholds 90% or more shares in the transferor company, it is entitled to and is alsounder obligation to acquire remaining shares. The transferee company shouldgive notice within one month to dissenting shareholders. Their shares must beacquired within three months of such notice.

Sec395 (3) As per this section, if shareholders do not submit the transfer deeds,the transferee company will pay the amount payable to transferor companyalong with the transfer deed duly signed. The transferor company will thenrecord name of the transferee company as holder of shares, even if transfer deed is not signed by dissenting shareholders.



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Sec395 (4) - As per this section, the sum received by transferor company shall be kept in a separate account in trust for the dissenting shareholders.

Sec395 (4A) When the transferee company makes offer to shareholders of transferor company, the circular of offer shall be accomplished by prescribedinformation in form 35A. Offer should contain statement by TransfereeCompany for registration before it is sent to shareholders of Transferor Company.

Sec 396 This section contains the power to Central Government to order amalgamation.

Sec.396 (1) - As per this sub-section, if central government is satisfied that twoor more companies should amalgamate in public interest, it can order their amalgamation, by issuing notification in Official Gazette. Government can provide the constitution of the single company, with such property, powers,rights, interest, authorities and privileges and such liabilities, duties and

obligations as may be specified in the order.

Sec 396(2) The order may provide for continuation by or against thetransferee company of any legal proceedings pending by or against Transferor Company. The order can also contain consequential, incidental andsupplemental provisions necessary to give effect to amalgamation.

Sec 396 (3) - As per this sub-section, every member, creditor and debentureholder of all the companies will have same interest or rights after amalgamation, to the extent possible. If the rights and interests are reduced

after amalgamation, he will get compensation assessed by prescribed authority.The compensation so assessed shall be paid to the member or creditor by thecompany resulting from amalgamation.

Sec 396A This section deals with the preservation of books and papers of amalgamated company. Books and papers of the company which hasamalgamated or whose shares are acquired by another company shall be preserved. These will not be disposed of without prior permission of CentralGovernment. Before granting such permission, Government may appoint a person to examine the books and papers to ascertain whether they contain anyevidence of commission of an offence.



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2. Monopolies and Restrictive Trade practices Act, 1969 (MRTP 1969) Certain Amendments in the MRTP Act were brought about in 1991. TheGovernment has removed restrictions on the size of assets; market shares andon the requirement of prior government approvals for mergers that createdentities that would violate prescribed limits. The Supreme Court, in a recent judgment, decided that ³prior approval of the central government for sanctioning a scheme of amalgamation is not required in view of the deletionof the relevant provision of the MRTP Act and the MRTP Commission was justified in not passing an order restraining implementation of the scheme of amalgamation of two firms in the same field of consumer articles´.

3. Foreign Exchange Regulation Act 1973 (FERA 1973)

FERA is the primary Indian Law which regulates dealings in foreign exchange.

Although there are no provisions in the Act which deal directly withtransactions relating to amalgamations, certain provisions of the Act becomerelevant when shares in Indian companies are allotted to non- residents, wherethe undertaking sought to be acquired is a company which is not incorporatedunder any law in India. Section 29 of FERA provides that no foreign companyor foreign national can acquire any share of an Indian company except with prior approval of the reserve Bank of India. The Act has been amended tofacilitate transfer of shares two non residents and to allow Indian companies toset up subsidiaries and joint ventures abroad without the prior approval of theReserve Bank of India.



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4. Income Tax Act, 1961

Income Tax Act, 1961 is vital among all tax laws which affect the merger of firms from the point view of tax savings/liabilities. However, the benefitsunder this act are available only if the following conditions mentioned inSection 2 (1B) of the Act are fulfilled:

a) All the amalgamating companies should be companies within themeaning of the section 2 (17) of the Income Tax Act, 1961.

b) All the properties of the amalgamating company (i.e., the target firm)should be transferred to the amalgamated company (i.e., the acquiringfirm).

c) All the liabilities of the amalgamating company should become theliabilities of the amalgamated company, and

d) The shareholders of not less than 90% of the share of the amalgamatingcompany should become the shareholders of amalgamated company.

In case of mergers and amalgamations, a number of issues may arise withrespect to tax implications. Some of the relevant provisions may besummarized as follows:

Depreciation: The amalgamated company continues to claim depreciation onthe basis of written down value of fixed assets transferred to it by theamalgamating company. The depreciation charge may be based on the

consideration paid and without any re-valuation. However, unabsorbeddepreciation, if any, cannot be assigned to the amalgamated company andhence no tax benefit is available in this respect.

Capital Expenditures: If the amalgamating company transfers to theamalgamated company any asset representing capital expenditure on scientificresearch, then it is deductible in the hands of the amalgamated company under section 35 of Income Tax Act, 1961.

Exemption from Capital Gains Tax: The transfer of assets by amalgamatingcompany to the amalgamated company, under the scheme of amalgamation isexempted for capital gains tax subject to conditions namely (i) that theamalgamated company should be an Indian Company, and (ii) that the sharesare issued in consideration of the shares, to any shareholder, in theamalgamated company. The exchange of old share in the amalgamatedcompany by the new shares in the amalgamating company is not considered assale by the shareholders and hence no profit or loss on such exchange istaxable in the hands of the shareholders of the amalgamated company.



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Carry Forward Losses of Sick Companies: Section 72A(1) of the IncomeTax Act, 1961 deals with the mergers of the sick companies with healthycompanies and to take advantage of the carry forward losses of theamalgamating company. But the benefits under this section with respect tounabsorbed depreciation and carry forward losses are available only if thefollowings conditions are fulfilled:

y The amalgamating company is an Indian company.

y The amalgamating company should not be financially viable.

y The amalgamation should be in public interest.

y The amalgamation should facilitate the revival of the business of theamalgamating company.

y The scheme of amalgamation is approved by a specified authority,and the amalgamated company should continue to carry on the business of the amalgamating company without any modification

Amalgamation Expenses: In case expenditure is incurred towards professional charges of Solicitors for the services rendered in connection withthe scheme of amalgamation, then such expenses are deductible in the hands of the amalgamated firm.



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5. The Competition Act, 2002

Following provisions of the Competition Act, 2002 deals with mergers of thecompany:-

(1) Section 5 of the Competition Act, 2002 deals with ³Combinations´ whichdefines combination by reference to assets and turnover

(a) Exclusively in India and

(b) In India and outside India.

For example, an Indian company with turnover of Rs. 3000 crores cannotacquire another Indian company without prior notification and approval of the Competition Commission. On the other hand, a foreign company withturnover outside India of more than USD 1.5 billion (or in excess of Rs. 4500crores) may acquire a company in India with sales just short of Rs. 1500

crores without any notification to (or approval of) the CompetitionCommission being required.

(2) Section 6 of the Competition Act, 2002 states that, no person or enterpriseshall enter into a combination which causes or is likely to cause anappreciable adverse effect on competition within the relevant market in Indiaand such a combination shall be void.

All types of intra-group combinations, mergers, demergers, reorganizationsand other similar transactions should be specifically exempted from thenotification procedure and appropriate clauses should be incorporated in sub-regulation 5(2) of the Regulations. These transactions do not have anycompetitive impact on the market for assessment under the Competition Act,Section 6.



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6. Mandatory permission by the courts

Any scheme for mergers has to be sanctioned by the courts of the country.The company act provides that the high court of the respective states wherethe transferor and the transferee companies have their respective registeredoffices have the necessary jurisdiction to direct the winding up or regulate themerger of the companies registered in or outside India.

The high courts can also supervise any arrangements or modifications in thearrangements after having sanctioned the scheme of mergers as per thesection 392 of the Company Act. Thereafter the courts would issue thenecessary sanctions for the scheme of mergers after dealing with theapplication for the merger if they are convinced that the impending merger is³fair and reasonable´.

The courts also have a certain limit to their powers to exercise their jurisdiction which have essentially evolved from their own rulings. For

example, the courts will not allow the merger to come through theintervention of the courts, if the same can be effected through some other provisions of the Companies Act; further, the courts cannot allow for themerger to proceed if there was something that the parties themselves couldnot agree to; also, if the merger, if allowed, would be in contravention of certain conditions laid down by the law, such a merger also cannot be permitted. The courts have no special jurisdiction with regard to the issuance

of writs to entertain an appeal over a matter that is otherwise ³final,conclusive and binding´ as per the section 391 of the Company act.



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3. Intellectual Property Due Diligence in Mergers and Acquisitions

The increased profile, frequency, and value of intellectual property relatedtransactions have elevated the need for all legal and financial professionalsand Intellectual Property (IP) owner to have thorough understanding of theassessment and the valuation of these assets, and their role in commercialtransaction. A detailed assessment of intellectual property asset is becomingan increasingly integrated part of commercial transaction. Due diligence isthe process of investigating a party¶s ownership, right to use, and right tostop others from using the IP rights involved in sale or merger ---the natureof transaction and the rights being acquired will determine the extent andfocus of the due diligence review. Due Diligence in IP for valuation wouldhelp in building strategy, where in:-

(a) If Intellectual Property asset is underplayed the plans for maximizationwould be discussed.

(b) If the Trademark has been maximized to the point that it has lost itscachet in the market place, reclaiming may be considered.

(c) If mark is undergoing generalization and is becoming generic, reclaimingthe mark from slipping to generic status would need to be considered.

(d) Certain events can devalue an Intellectual Property Asset, in the sameway a fire can suddenly destroy a piece of real property. These sudden eventsin respect of IP could be adverse publicity or personal injury arising from a product. An essential part of the due diligence and valuation process accounts

for the impact of product and company-related events on assets ± management can use risk information revealed in the due dili gence.

(e) Due diligence could highlight contingent risk which do not always arisefrom Intellectual Property law itself but may be significantly affected by product liability and contract law and other non Intellectual Property realms.

Therefore Intellectual Property due diligence and valuation can be correlatedwith the overall legal due diligence to provide an accurate conclusionregarding the asset present and future value



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4. Legal Procedure for Bringing About Merger of Companies

(1) Examination of object clauses:

The MOA of both the companies should be examined to check the power to

amalgamate is available. Further, the object clause of the merging companyshould permit it to carry on the business of the merged company. If suchclauses do not exist, necessary approvals of the share holders, board of directors, and company law board are required.

(2) Intimation to stock exchanges:

The stock exchanges where merging and merged companies are listed should be informed about the merger proposal. From time to time, copies of allnotices, resolutions, and orders should be mailed to the concerned stock

exchanges.

(3) Approval of the draft merger proposal by the respective boards:

The draft merger proposal should be approved by the respective BOD¶s. The board of each company should pass a resolution authorizing itsdirectors/executives to pursue the matter further.

(4) Application to high courts:

Once the drafts of merger proposal is approved by the respective boards, each

company should make an application to the high court of the state where itsregistered office is situated so that it can convene the meetings of shareholders and creditors for passing the merger proposal.

(5) Dispatch of notice to share holders and creditors:

In order to convene the meetings of share holders and creditors, a notice andan explanatory statement of the meeting, as approved by the high court,should be dispatched by each company to its shareholders and creditors sothat they get 21 days advance intimation. The notice of the meetings should

also be published in two news papers.

(6) Holding of meetings of share holders and creditors:

A meeting of share holders should be held by each company for passing thescheme of mergers at least 75% of shareholders who vote either in person or by proxy must approve the scheme of merger. Same applies to creditors also.



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(7) Petition to High Court for confirmation and passing of HC orders:

Once the mergers scheme is passed by the share holders and creditors, thecompanies involved in the merger should present a petition to the HC for confirming the scheme of merger. A notice about the same has to be published in 2 newspapers.

(8) Filing the order with the registrar:

Certified true copies of the high court order must be filed with the registrar of companies within the time limit specified by the court.

(9) Transfer of assets and liabilities:

After the final orders have been passed by both the HC¶s, all the assets andliabilities of the merged company will have to be transferred to the mergingcompany.

(10) Issue of shares and debentures:

The merging company, after fulfilling the provisions of the law, should issueshares and debentures of the merging company. The new shares anddebentures so issued will then be listed on the stock exchange.



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5. Waiting Period in Merger

International experience shows that 80-85% of mergers and acquisitions donot raise competitive concerns and are generally approved between 30 -60days. The rest tend to take longer time and, therefore, laws permit sufficienttime for looking into complex cases. The International Competition Network,an association of global competition authorities, had recommended that thestraight forward cases should be dealt with within six weeks and complexcases within six months.

The Indian competition law prescribes a maximum of 210 days for determination of combination, which includes mergers, amalgamations,acquisitions etc. This however should not be read as the minimum period of compulsory wait for parties who will notify the Competition Commission.

In fact, the law clearly states that the compulsory wait period is either 210days from the filing of the notice or the order of the Commission, whichever

is earlier. In the event the Commission approves a proposed combination onthe 30th day, it can take effect on the 31st day. The internal time limitswithin the overall gap of 210 days are proposed to be built in the regulationsthat the Commission will be drafting, so that the over whelming proportion of mergers would receive approval within a much shorter period.

The time lines prescribed under the Act and the Regulations do not takecognizance of the compliances to be observed under other statutory provisions like the SEBI (Substantial Acquisition of Shares and Takeovers)Regulations, 1997 (µSEBI Takeover Regulations¶).

SEBI Takeover Regulations require the acquirer to complete all proceduresrelating to the public offer including payment of consideration to theshareholders who have accepted the offer, within 90 days from the date of public announcement. Similarly, mergers and amalgamations get completedgenerally in 3-4 months¶ time.

Failure to make payments to the shareholders in the public offer within thetime stipulated in the SEBI Takeover Regulations entails payment of interest by the acquirer at a rate as may be specified by SEBI. [Regulation 22(12) of the SEBI Takeover Regulations] It would therefore be essential that themaximum turnaround time for CCI should be reduced from 210 days to 90days.



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CASE: TATA & CORUS ACQUISITION

A land mark deal in the history of Indian industry in general and the steelindustry in particular.

Steelµs new debt load. But despite all this, euphoria gripped the nation.Finance minister P. Chidambaram offered unspecified help, if needed, to

close the deal; fellow steel magnate Lakshmi Niwas Mittal cheered theacquisition, and excited TV newsreaders gushed. Indiaµs first Fortune 500MNC was born.

Tata acquired Corus, which is four times larger than its size and the largeststeel 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. Over the past fiveyears, Indian companies had made global acquisitions for over $10 billion.The Tata bid almost equals this amount. Most of them have averaged $100 to

200 million.

Tata acquired Corus on the 2nd of April 2007 for a price of $12 billionmaking the Indian company the Worldµs fifth largest steel producer. Thisacquisition process has started long back in the year 2005. However, Coruswas involved in a considerable number of Merger& Acquisition (M&A) dealsand joint ventures (JVs) before Tata.

In an interview to CNBC India, B Muthuraman also said that they areacquiring Corus for synergy and not for tonnage. "There are synergies in

operations, manufacturing, marketing etc."

This process started in the year 2000 and with Tata it came to an end. In a period of seven years Corus was involved in 14 deals apart from Tata. In2005, when the deal was started the price per share was 455 pence. Butduring the time of acquisition held in 2007, the price per share was 608 pence, which is 33.6% higher than the first offer. For this deal Tata hasfinanced only $4 billion, although the total price of this deal was $12billion.



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Background - Tata Steel

Backed by 100 glorious years of experience in steel making, Tata Steel isamong the top ten steel producers in the World with an existing annual crudesteel production capacity of 30 Million Tons Per Annum (MTPA).Established in 1907, it is the first integrated steel plant in Asia and is now theWorld`s second most geographically diversified steel producer and a Fortune500 Company.

Tata steel is a part of the Tata Group, One of the largest diversified businessconglomerates in India. Tata steel generated sales of 17452 Crores infinancial year 06-07. The company¶s profit in the same year was Rs 4222Crores.

The company produced around 5 million tons of crude steel in 2007 and has a balanced global presence in over 50 developed European and fast growing

Asian markets, with manufacturing units in 26 countries.

It was the vision of the founder; Jamsedji Nusserwanji Tata, that on 27thFebruary, 1908, the first stake was driven into the soil of Sakchi. His visionhelped Tata Steel overcome several periods of adversity and strive to improveagainst all odds.

Tata Steel`s Jamshedpur (India) Works has a crude steel production capacityof 6.8 MTPA which is slated to increase to 10 MTPA by 2010. The Companyalso has proposed three Greenfield steel projects in the states of Jharkhand,

Orissa and Chhattisgarh in India with additional capacity of 23 MTPA and aGreenfield project in Vietnam.

Through investments in Corus, Millennium Steel (renamed Tata SteelThailand) and NatSteel Holdings, Singapore, Tata Steel has created amanufacturing and marketing network in Europe, South East Asia and the pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in2008, has operations in the UK, the Netherlands, Germany, France, Norwayand Belgium.



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Background ± Corus

The London-based Corus Group is one of the world's largest producers of steel and aluminium. Corus was formed in 1999 following the merger of Dutch group Koninklijke Hoogovens N.V. with the UK's British Steel Plc onOctober 6, 1999. It employs 47,300 people worldwide and 24,000 people inthe United Kingdom.

Corus is a leading European manufacturer providing steel and aluminium products and services worldwide. The company is comprised of four Divisions; Strip Products, Long Products, Distribution & Building Systemsand Aluminium2, and has a global network of sales offices and servicecentres. It focuses on semi-finished and finished carbon steel products and isnot involved in iron ore extraction.

Corus is Europe¶s second largest steel producer with revenues in 2005 of £9.2

billion (US$18 billion and crude steel production of 18.2 million tonnes, primarily in the UK and the Netherlands. Corus provides innovative solutionsto the construction, automotive, packaging, mechanical engineering and other markets worldwide.

Corus has manufacturing operations in many countries with major plantslocated in the UK, The Netherlands, Germany, France, Norway and Belgium.

Consisting four divisions: Strip products, Long products, Aluminium andDistribution, Building system, Corus is a Supplier to many of the most

demanding markets worldwide including construction, automotive, packaging, and engineering.

Corus was acquired by Tata Steel in 2007 and is now part of Ta ta SteelGroup, which is the 6th largest global steel producer.



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Tata and Indian Steel Industry

Tata Steel has established by Indian Parsi Businessman Jamsedji Tata in 1907,exactly in the year when British American Tobacco (BAT) has started its firstfactory in India. But it started operating in the year 1912. Tata Steel holds avery vital place in Indian business history, because it has introduced some of theunique concepts like 8-hour working days, leave with pay and pension systemfor the first time in India and the first player to start rapid industrialization process. In the later part the concepts invented and implemented by Tata became lawful and compulsory practice for the Indian employees. From TataSteel, Tata has started investing in various other businesses like; Oil mills,Airlines Publishing, Motors, Consultancy services etc in a short span of 30years.

In the year 1945Tata entered into tea business by the name of Tata Tea, whichwas called as Tata Finlay earlier. Tata also entered into exports as Tata Exports,which is the most successful and the largest export house in India. During the

entire business in India Tata has seen many ups and downs, in different fields of business. If we will look at the companyµs financial status/condition, it will givesome idea about the condition and performance of the company across the years.

The Indian Steel industry is regarded as the most important component for thedevelopment of nation, because steel industry (heavy industry) is considered asa very important and influential parameter for the development of any modern

economy. The finished steel production in India has grown from 1.1 milliontons in 1951 to 31.63million tones in 2001 -02, which can be regarded as aremarkable example of Indiaµs development in economic activities.

Tata played a vital role in the improvement of steel production also. For thatreason in the development of Indiaµs economy, Tata played a significant role.As a result the consumption level of steel from 1990 to 2002 was continuouslyin an increasing order, but in 2003 it was not like earlier. In respect to the per capita income and consumption of steel it is very less in India with compare toother countries. Indiaµs major market for steel and steel items include USA,

Canada, Indonesia, Italy, West Asia, Nepal, Taiwan, Thailand, Japan, Sri Lankaand Belgium. The major steel items of export include HR coils, plates, CR andgalvanized products, pipes, stainless steel, wire rods and wires. With the fall in

prices along with depressed domestic demand, India has been increasing exportsto overcome the excess supply situation. This has resulted in antidumpingactions being taken by developed countries like USA, EU and Canada. Thetrade action by some countries against Indian steel industry has, to some extent,affected Indiaµs exports to these countries. The Government of India a nd theIndian steel producers are trying to combat such actions despite such efforts being very expensive and involving time -consuming procedures.



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The Deal

The deal (between Tata & Corus) was officially announced on April 2nd,2007 at a price of 608 pence per ordinary share in cash. This deal is a 100%acquisition and the new entity will be run by one of Tataµs steel subsidiaries.As stated by Tata, the initial motive behind the completion of the deal wasnot Corus¶ revenue size, but rather its market value. Even though Corus islarger in size compared to Tata, the company was valued less than Tata (atapproximately $6 billion) at the time when the deal negotiations started.

But from Corus¶ point of view, as the management has stated that the basicreason for supporting this deal were the expected synergies between the twoentities. Corus has supported the Tata acquisition due to different motives.However, with the Tata acquisition Corus has gained a great and profitableopportunity to make an exit as the company has been looking out for a potential buyer for quite some time. The total value of this acquisitionamounted to 6.2 billion (US$12 billion). Tata Steel the winner of the auction

for Corus declares a bid of 608 pence per share surpassed the final bid fromBrazilian Steel maker Companhia Siderurgica Nacional (CSN) of 603 pence per share.

Prior to the beginning of the deal negotiations, both Tata Steel and Coruswere interested in entering into an M&A deal due to several reasons. Theofficial press release issued by both the company states that the combined

entity will have a proforma crude steel production of 27 million tons in 2007,with 84,000 employees across four continents and a joint presence in 45countries, which makes it a serious rival to other steel giants.

The official declaration of the completed transaction between the twocompanies was announced to be effective by Court of Justice in England andWales and consistent with the Scheme of Arrangement of the Tata SteelScheme on April 2, 2007.

The process started on September 20, 2006 and was completed on April 2,2007. In the process, both the companies have faced many ups and downs.The details of this process have been described below.

September 20, 2006:

Corus Steel has decided to acquire a strategic partnership with a Companythat is a low cost producer

October 5, 2006:

The Indian steel giant, Tata Steel wants to fulfil its ambition to expand its business further.



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October 6, 2006:

The initial offer from Tata Steel is considered to be too low both by Corusand analysts.

October 17, 2006:

Tata Steel has kept its offer to 455pence per share.

October 18, 2006:

Tata still doesnµt 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 Steelµs bid.

October 27, 2006:

Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for itsdecision 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 475 pence per share.

November 27, 2006:

The board of Corus decides that it is in the best interest of its willshareholders to give more time to CSN to satisfy the preconditions anddecide whether it issue forward a formal offer.



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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.

January 31, 2007:

Britain¶s Takeover Panel announces in an e-mailed statement that after anauction Tata Steel had agreed to offer Corus investors 608 pence per share incash.

April 2, 2007: Tata Steel manages to win the acquisition to CSN and has thefull voting support form Corus¶ shareholders.



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CALCULATION OF BOOK VALUE OF CORUS

Total Asset £ m £ m

Non-current Asset 3668

Current assets 4412

8080Total Liabilities

Non-current Asset 1798

Current Liabilities 2348

4146

Net Asset 3934

(-) Minority Interest 4

Total 3 30

Share capital of Corus

945,555,438 ordinary share of 50p each 473

3,130,418,153 deferred share of 40p each 1252

Total 1725

BALANCE SHEET AS ON 30 SEP. 06

Book value of one share of Corus as

Per balance sheet on 30.9.2006 3930/1725= 2.27£ or 227 p

Mar k et value of one share of Corus

On 17.10.200647 p

Fair value of one share of Corus

(Book value + mar k et value)/2 (227 + 479)/2 =

353 p

Price paid by Tata steel per share of Corus was 608 p was almost double thefair value of one share of Corus.



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Reasons for Tata Steel to Bid

TATA was looking to manufacture finished products in a mature market of Europe± U.K. undoubtedly is the most mature market in Europe.

TATA STEEL manufactured low value long and flat steel products whileCorus produced high value striped products.

A diversified product mix would reduce risk while higher end productwould add to the bottom line.Corus held a number of patents and R&D facility.Cost of acquisition was lower than setting up a green field plant andmarketing and distribution channel.TATA was and is known for efficient handling of labour and it aimed atreducing employee cost and improving productivity at Corus.

It had already expanded its capacities in India.It would improve from 55th in World to 5th in production of steelglobally.Technology benefits: Being among one of the biggest manufacturers of steel the production facility of Corus was using better technology ascompared to Tata Steel. Moreover, Corus was into finished steel production, a technology which was new for Tata Steels. Patents were an

added advantage which Corus provided to Tata Steels.Economies of scale: Having acquired Corus, Tata Steels overall production capacity had increased manifold and provided Raw Material at

cheaper rates to the Corus Facility from its diverse sources across theworld.The powerful combination of low cost upstream production in India withthe high end downstream processing facilities of Corus will improve thecompetitiveness of the European operations of Corus significantlyThe combination will also allow the cross- fertilization of R&Dcapabilities in the automotive, packaging and construction sectors andthere will be a transfer, from Europe to India, of technology, best practicesand expertise of senior Corus management

Reasons for Corus to be Sold

Total debt of Corus was 1.6 bn GBP.Corus needed supply of raw materials at lower cost.Though Corus had revenues of $18.06bn, its profits were just $ 626mn.(TATAµs revenue was $4.84 bn & profit $824 mn.)Corus facilities were relatively old with high cost of productionEmployee cost was 15 % (TATA steel ± 9%)There was access to cheap high quality iron ore from India.



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A Financial take on the Acquisition.

A Financial take on the Acquisition.

1. Valuation

TATA Steel Paid 7 Times EBITDA of Corus¶ Enterprise Value

Also, 9 times EBITDA for 12 Months ended 30th September 2006

Comparing with Arcelor - Mittal deal-

Mittal Steel acquired Arcelor at an EBITDA of 4.5 times,

The important point is Arcelor had much superior assets, wider marketreach and was financially stronger than Corus.

The price paid by Tata Steel looks almost obscenely high.

2. Interest charges

± New Debt of $ 8 bn @ 8% annual interest cost i.e. $ 640 mn

± Corusµs existing interest debt amounts to $ 725 mn.

Tata¶s new debt amounting to $8 billion due to the acquisition, financed withCorus¶ cash flows, is expected to generate up to $640 million in annualinterest charges (8% annual interest cost). This amount combined with Corus¶

existing interest debt charges of $400 million on an annual basis implies thatthe combined entity¶s interest obligation will amount to approximately $725million after the acquisition

The debate whether Tata Steel has overpaid for acquiring Corus is most likelyto be certain, since just based on the numbers alone i t turns out that at the endof the bidding conflict with CSN, Tata ended up paying approximately68%above the average price of Corus¶ shares.

During the year, the Company completed the long term financing programmefor the Corus acquisition.

Of the total Enterprise Value of USD 14.2 billion, at the close of the Corusacquisition process on April 2, 2007, the financing included around USD 10.5 billion as bridge funding, the balance being applied out of Tata Steel¶s owncash and borrowings.



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Despite very volatile credit markets globally, the company raised aroundUSD 6.2 billion of term debt with an average lifeofaround5 yeas at verycompetitive terms.

This debt being non -recourse in nature was determined based on the cashflow servicing capability of our European operations and will be serviced bythe Tata Steel UK (Corus) cash flows.

The syndication of the above debt was completed during the year with morethan 25 banks and institutions participating in the process.

On the equity side, Tata Steel raised around USD 2.27 billion (Rs.9,120Crores) of equity and convertible preference shares on a rights basis.

The Company further raised around USD 875 million in ConvertibleAlternate Reference Securities (CARS) which is a 5years convertibleinstrument with a coupon of 1% and a conversion premium of 35%tot he

prevailing market price in August2007.

As a result of the above, Tata Steel raised around USD 10 billion during theyear and completed the long term financing for the Corus acquisition

Tata Steel Performance Highlight 2010

Tata steel group results were enhanced by dramatic turnaround in the performance TS Europe, which reported a positive EBIDTA of Rs2303

Crores in H2 FY10 compared to an EBIDTA loss inH1 FY10of Rs 3655Crores.



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Post Acquisition Analysis

1) Aggregate crude steel production capacity of around 41.2 million tons.

Tata Steel on its own had a capacity of 23 million tonnes out of all itsfacilities. With the acquisition of CORUS, which had a capacity of 18.2million tones the overall capacity catapulted to 41.2 million tonnes.

2) Global Player with a balanced presence in developed European and fastgrowing Asian Markets. Before acquisition of Corus, Tata steel was mostly present in Asian market but after acquisition of Corus it gained 10% marketin North America, 49% in Europe and 29% in UK.

3) Greenfield and Brownfield developments.

Tata Steel has lined up a series of Greenfield projects in India and outsidewhich includes...

1. 6 million tonnes plant in Orissa (India)2. 12 million tons in Jharkhand (India)3. 5 million tons in Chhattisgarh (India)4. 3 million tons plant in Iran5. 2.4 million tons plant in Bangladesh6. 5 million tons capacity expansion at Jamshedpur (India)

4) May 07 EBITDA of 13 %, 25 mn tons of production, Ranked 5th

5) 2012 EBITDA of 25 %, 40 mn tons of production, Ranked 2nd

6) The group is growing aggressively and targets 50 mn tons capacity by2015



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Prime Time Matters

Tata Steel's acquisition of Corus was a bold and smart move. Complementary benefits in terms of scale, market geography, financials, technology and rawmaterials offered a strong rationale for the deal.

On January 31st, 2007 India¶s Tata Steel acquired Corus, the erstwhile BritishSteel Major at a price of 608 pence per Corus share totaling $12.1 billion/ Rs54,000 crore/ £6.1 bn, which was five pence per share higher than the offer of Brazil¶s CSN (Companhia Siderugica Nacional). The deal is the largestIndian takeover of a foreign company, and creates the world's fifth-biggeststeel company from the present 56

thrank.

The case of Tata Steel acquiring Corus throws up several interestingquestions on emerging multinationals and traditional multinationals in thesteel industry and particularly the complexities of the acquisition in the above

context. What has been surprising in the above case is that how could a smallsteel maker, Tata Steel from a developing country like India buy up a largesteel company, Corus PLC from the United Kingdom.

Prior to the acquisition, Corus was four times bigger than Tata Steel.However, the operating profit for Tata Steel was $840 million (sale of 5.3million tonnes), whereas in case of Corus it was $860 million (sale of 18.6million tonnes) in the year 2006. It is also interesting to find out why a largeglobal steel maker, Corus decided to sell itself off to a small steel maker froma developing country.

Corus had accumulated huge debt burden, made operational losses and whoseshare price had drastically come down. The intriguing issue of thisacquisition has been on how the final bidding price of the Corus rise up to70% over the stock price of Corus prior to the bidding. Most importantly,how did Tata Steel organize the huge capital for the acquisition? It appearsthat several external players participated in the acquisition process and sohow were they all involved in the bidding process. Further, the issues of postacquisition are also unique in this case as the context and culture of theacquirer and the acquired companies are different.



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Corus-Tata deal: An instance of how laws can constrict M&A

The Corus-Tata deal continues to make news, even as both the companiescontinue to consider various options to combine. For watchers of M&A(merger and acquisition), the deal is a case study of how Indian acquirershave to consider takeover code and other laws in a different country, such asthe UK., apart from taking care that Indian laws are complied w ith.

While the Indian Companies Act, 1956, usually governs mergers in India,international deals involve additional compliances with rules laid down under the FEMA (Foreign Exchange Management Act, 1999) and associated law.Further, listed companies are also subject to the rules and regulations laiddown by the SEBI (Securities and Exchange Board of India).

The latter two laws can complicate any cross-border M&A

"There are often occasions when interplay between SEBI regulations and

those of FEMA can make it difficult for deals to be structured. The bestexample is the 3(3) notice required to be given in the case of inter-se promoter acquisition under the SEBI takeover code.

"The 3(3) notice mandates that a notice has to be given to the stock exchangewhere the shares of the company are listed four days prior to any inter-se promoter transfer of shares.

"However, under the FEMA a non-resident can only acquire shares of anIndian company at market price."

If the four-day notice is given to the stock exchanges, it encouragesspeculation on the company's share price, making it difficult for the foreignacquirer to buy the shares at market price because the market price may not be the true price of the shares but just a speculative price over four days."

It is possible to make M&A less painful, "SEBI and the RBI (ReserveBank of India) may each establish an effective legal cell, which should beable to respond to questions raised by the parties to a merger on a timely basis," he suggests.



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Law applied in merger of Indian companies with foreign firms

The Companies Act Amendment Bill, which was tabled in Parliament in theBudget session that adjourned last week, has proposed to allow Indiancompanies to merge with overseas companies, a move that could introd ucegreater flexibility in cross-border merger and acquisitions (M&As).

At present Sections 391-394 of the Companies Act, 1956, allow onlyforeign companies to merge with Indian ones. The Bill has introducedSection 205 that also allows the reverse and stipulates that payment toshareholders of listed Indian companies being merged can be in the form of cash, shares or Indian Depository Receipts (IDRs) issued by the overseascompanies.

The amendment was first suggested in 2005 by an expert committee oncompany law chaired by Tata Sons Director J J Irani. The report had statedthat ³both contract as well as court-based mergers between an Indian

company and a foreign company, where the foreign company is thetransferee, needs to be recognized in Indian law.

The committee recognizes that this would require some pioneering work between various jurisdictions in which such mergers and acquisitions are being executed /created´. If this amendment goes through, it will meet a keydemand of many multinational companies investing in India.

Legal experts said the merger of an Indian company with a foreign onecan help structure M&A deals in many ways. For example, if an overseas

company has acquired another foreign company that has a subsidiary in India,the new provision will allow the acquirer to merge the Indian operations withit, instead of retaining it as a separate entity.



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Benefits of TATA-CORUS deal to the stakeholders of TATA Steel

Under the following circumstances TATA and its stakeholders will benefitfrom the merger:

y Any advantage and profits from this deal will merge only when TataSteel would be in a position to export low-cost slabs to Corus.

y There may be restraints to exports as Tata Steel will need to heed therequirements of its other acquired companies in South East Asia of NatSteel and Millennium Steel.

y This effect may change if the Tata¶s can acquire businesses in the low-cost regions such as Latin America, opening up an assured source of slab-making that can be exported to Corus¶s plants in the UK.

y Iron ore policy in India undergoes a major change in the coming years.

y If global consolidation becomes possible with the merger of ThyssenKrupp with Nucor or Severstal with Gerdau or any the top five players.The possibility of pricing stability may ease the performance pressureson Tata-Corus and moderate the risks of restructuring at high cost plants in UK

If Tata¶s considers global listing say in London it may help the groupcommands a much higher price-earnings multiple and give it more flexibilityin managing its finances



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Short-Term Implications

Investors with a one-to-two year perspective may find the Tata Steel stock unattractive at current price levels. While the potential downside to the stock may be limited, it may consolidate in a narrow range, as there appears to beno short-term triggers to drive up the stock. The formalities for completingthe acquisition may take three to four months, before the integrationcommittees get down working on the deal. In our view, three elements arestacked against this deal in the short run:

1) Equity dilution: The financing of the acquisition is unlikely to pose achallenge for the Tata group, but the financial risks associated with high-cost debt may be quite high. Though the financing pattern is yet to be speltout fully, initial indications are that the $4.1 billion of the totalconsideration will flow from Tata Steel/Tata Sons by way of debt andequity contribution by these two and the balance $8 billion, will be raised by a special investment vehicle created in the UK for this purpose.

Preliminary indications from the senior management of Tata Steel suggestthat the debt-equity ratio will be maintained in the same proportion of 78:22, in which the first offer was made last October. Based on this, a 20-25 per cent equity dilution may be on the cards for Tata Steel. The equitycomponent could be raised in the form of preferential offer by Tata Steelto Tata Sons, or through GDRs (global depository receipts) in the overseasmarket or a rights offer to shareholders. This dilution is likely tocontribute to lower per share earnings, whose impact will be spread over the next year or so. As Tata Steel also remains committed to its six-million-tone green field ventures in Orissa, its debt levels may raise

sharply in the medium term.

2) Margin picture: Short-term triggers that may help improve the operating profit margin of the combined entity seem to be missing. In the thirdquarter ended September 2006, Corus had clocked an operating margin of

9.2 per cent compared with 32 per cent by Tata Steel for the third quarter ended December 2006. In effect, Tata Steel is buying an operation withsubstantially lower margins. Corus has been working on the "Restoring

Success" programme aimed at closing the competitive gap that existed between Corus and the European steel peers. The gap in 2003 was about 6 per cent in the operating profit level when measured against the average of European competitors. And this programme is expected to deliver the full benefits of 680 million pounds in line with plan. With this programmerunning out in 2006 and being replaced by `The Corus Way', the scope for Tata Steel to bring about short-term improvements in margins may belimited. Even the potential synergies of the $300-350 million a year



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expected to accrue to the bottom-line of the combined entity from the thirdyear onwards, may be at lower levels in the first two years. As outlined byMr. B. Muthuraman, Managing Director of Tata Steel, synergies areexpected in the procurement of material, in the marketplace, in sharedservices and better operations in India by adopting Corus's best practicesin some areas.

3) The steel cycle: While the industry expects steel prices to remain firm inthe next two-three years, the impact of Chinese exports has not beenfactored into prices and the steel cycle. There are clear indications thatsteel imports into the EU and the US have been rising significantly. At 10-12 million tons in the third quarter of 2006, they are twice the level in thesame period last year and China has been a key contributor. This has led toconsiderable uncertainty on the pricing front. Though regaining pricing power is one of the objectives of the Tata-Corus deal, prices may not

necessarily remain stable in this fragmented industry. The top five players,even after this round of consolidation, will control only about 25 per centof global capacities. Hence, the steel cycle may stabilize only if the latestdeal triggers a further round of consolidation among the top ten producers.



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Long-Run Picture

Whenever a strategic move of this scale is made (where a company takes over a global major with nearly four times its capacity and revenues), it is clearlya long-term call on the structural dynamics of the sector. And investors willhave to weigh their investment options only over the long run. Over a longtime-frame, the management of the combined entity has far greater room tomanoeuvre, and on several fronts. If you are a long-term investor in TataSteel, the key developments that bear a close watch are :

1) Progress on low-cost slabs: Research shows that steel-makers in Indiaand Latin America, endowed with rich iron ore resources, enjoy a 20 per cent cost advantage in slab production over their European peers.Hence, any meaningful gains from this deal will emerge only by 2009-10, when Tata Steel can start exporting low-cost slabs to Corus. This isunlikely to be a short-term outcome as neither Tata Steel's six-million-tone green field plant in Orissa nor the expansion in Jamshedpur is

likely to create the kind of capacity that can lead to surplus slab-making/semi-finished steel capacity on a standalone basis. Second,there may be further constraints to exports as Tata Steel will also beservicing the requirements of NatSteel, Singapore, and MillenniumSteel, Thailand, its two recent acquisitions in Asia. However, thisdynamic may change if the Tatas can make some acquisitions in low-cost regions such as Latin America, opening up a secure source of slab-making that can be exported to Corus's plants in the UK. Or if the ironore policy in India undergoes a change over the next couple of years,Tata Steel may be able to explore alternatives in the coming years.

2) R estructuring at Corus: The raison d'etre for this deal for Tata Steelis access to the European market and significantly higher value-added presence. In the long run, there is considerable scope to restructureCorus' high-cost plants at Port Talbot, Skuthorpe and the slab-making

unit at Teesside. The job cuts that Tata Steel is ruling out at presentmay become inevitable in the long run. Though it may be premature atthis stage, over time, Tata Steel may consider the possibility of

divesting or spinning off the engineering steels division at Rotherhamwith a production capacity of 1 million tones. The ability of the Tata¶sto improve the combined operating profit margins to 25 per cent (fromaround 14 per cent in 2005) over the next four to five years will hingeon these two aspects. In our view, two factors may soften the risks of dramatic restructuring at the high-cost plants in UK.



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i. If global consolidation gathers momentum with, say, the merger of ThyssenKrupp with Nucor, or Severstal with Gerdau or any of thetop five players, the likelihood of pricing stability may ease the performance pressures on Tata-Corus.

ii. If the Tata¶s¶ contemplate global listing (say, in London) on the

lines of Vedanta Resources (the holding company of SterxliteIndustries), it may help the group command a much higher price-earnings multiple and give it greater flexibility in managing its

finances.



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Benefits of the TATA-CORUS deal to the stakeholders of CORUS

In order to survive, Corus needs to extend its global reach just as much asTata does.

A tie-up with Tata gives it, among other things, access to markets in India -one of the fastest-growing economies in the world - as well as access to low-

cost materials.

Shareholders in Corus gained from the acquisition as the premium offeredmuch more price than the book value of shares.

Both companies exhibit degrees of cooperative spirit despite competitivenessin providing rescues to each other from hostile takeovers and cultivatesituations of collaborations sharing goodwill of each other to achieve performance heights through business combinations.

The acquisition was pursued to obtain the desired level of integration between the two combining business houses. This integration was operationaland financial.

Some other benefits:

1. Corus shares rose 6.8% to 601.5 pence in intraday trading on theLondon stock exchange on January 31, 2007.

2. Corus' well known strength is the production of high-end steel-used inconstruction automobile and aircraft as well as its impressive researchand development will complement Tata Steel. The merger will alsogive it access to the important markets of Europe. All that will benefitCorus is the management expertise of the Tata¶s and their costadvantage in producing steel. With their acumen they will bring downthe production cost of Corus.

3. Corus have a much better R&D and Tata have also better R&D other than in India, so combine entity have very strong R&D Dept. thatwould enable them to create a better output and faces competitivemajors successfully in future market.



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IMPACT OF CORUS ACQUISITION ON INDIAN CORPORATE MORALE

There was tremendous outpouring of nationalistic euphoria and economic patriotism in the Indian press after this deal. During the early weeks of 2007,The Times of India the bestselling English daily newspaper, was reportedly³inviting its readers to discuss the new µIndia poised for global supremacy¶

The Tata deal has fed an unmistakable undertone of triumph as the country¶sstatus as the world¶s second fastest growing economy.´

The Economic Times, India¶s best selling business newspaper reported ³For India, this deal is not about size²it¶s the first step towards what we call theGlobal Indian Takeover.´

According to Ratan Tata, who spoke at the time of the acquisition, ³It¶s atremendous strategic acquisition. I believe this will the first step in showingthat Indian industry can in fact step outside the shores of India in an

international marketplace and acquit itself as a global player´ (InternationalHerald Tribune, 2007, January 30). Kamal Nath (Johnson, 2007 January 15,4), the Indian Minister for Commerce and Industry felt that the ³global perception of India is changing«it¶s a two-way street now«.not only isIndia seeking foreign investment, but Indian companies are emerginginvestors in other countries.´ The Confederation of Indian Industry, India¶slargest business association described the acquisition as ³path breaking´which would enable emerging Indian firms to gain greater respect from theglobal business community.

For the first time in 2006, overseas acquisitions by Indian firms exceeded thevalue of foreign companies buying in India. During the first six months of 2006, Indian companies had completed approximately 78 cross-border acquisitions worth $5.2 billion. For the year ending 2006, outbound deals byIndian companies totaled $22.4 billion compared with $11.3 billion in purchases from abroad. (Harris 2007, March 9).

Indian business executives attribute this new confidence in part to a decade of restructuring that started in 1991 when newly drafted laws allowed greater foreign competition. Others point to the successes of Indian based firms suchas Infosys Technologies, Wipro and TCS who have proven to be world classcompetitors from a cost/quality perspective.

In the wake of Tata Steel¶s acquisition of Corus, the chief executive of ICICI,India¶s second largest bank, proposed that Indian firms now ³have theconfidence to go out and buy´ buoyed by substantial corporate profits whichhave provided large cash surpluses over the last 18 quarters. He believed thatthe Tata-Corus deal would most likely lead to a string of takeovers in the UK by Indian companies (Knight Ridder, 2007, April 27).





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Epilogue

The liberalization of industrial policy and other initiatives taken by theGovernment have given a definite impetus for entry, participation and growthof the private sector in the steel industry.

Cross-border mergers and acquisitions have gained tremendous popularity

among Indian executives as a means to achieve growth and secure a global presence. There are numerous seminars dealing with mergers and acquisitionswhere seasoned M&A executives offer advice on a number of topics rangingfrom government rules and regulations, pitfalls to avoid, and cultural issuesimpacting post-merger scenarios.

Indian companies are now eyeing Global markets instead of domestic tomove up the growth ladder. If you are a large company, you need to have a presence in US and Europe. Managers and Executives of Indian companiesare taking much higher Risks than ever before.

Also, the regulatory changes have made the whole process of acquisitionmuch easier than ever before. Some restrictions like the amount of Foreignexchange entering India have been relaxed. The result is that Indiancompanies are flush with foreign exchange!

Indeed Tata¶s acquisition of Corus is a great example how in a giant leap,Tata Steel's acquisition of the Anglo-Dutch steel major Corus has vaulted theformer to the fifth position from 56th in global steel production capacity.

Media reaction to the deal was so exiting that almost all the reports wereflattery while editorials praised the coming of age of Indian industry. A prominent financial daily presented the deal almost as revenge of the nativesagainst the old colonial masters with a picture of London covered in our national colours.

Official reaction had been no different and the finance minister even offeredall possible help to the Tata Group.

Deals like this definitely catapult the nation into top of the mind recall for various corporate honchos internationally. It makes them sit up and take

notice of the country. Further it sends out positive signals since the country isno longer dependant on inward remittances but is actually investing overseas.



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Bibliography

www.mergerdigest.com

www.mergersindia.com

www.economywatch.com

www.livemint.com

www.lawmirror.com

http://www.allindiareporter.in

www.thehindubusinessline.com

http://www.articlesbook.com



Case Reference Index

Sr. No. Particulars Page no.

1 Certificate 1

2 Acknowledgement 23 Prologue 3

4 Case Study Index 4

5 Case Study 5

- Introduction to Merger & Acquisition-

6 Merger 6

7 Amalgamation6

8 Consolidation7

9 Acquisition 7

10 Takeover 7

11 Types of Merger 8

12 Types of Acquisition9

13 Motives behind Merger & Acquisition10

- Legal Procedures for Merger & Acquisition-

14 Takeover and Listing Agreement Exemption Clauses14

15 SEBI (Substantial Acquisition of shares and takeover) Regulations Act, 199715

16 Indian Companies Act, 195619

17 Monopolies and Restrictive Trade Practices Act, 196924

18 Income Tax Act, 196125

19 The Competition Act, 200227

20 Mandatory Permission by the Courts28

21 Intellectual Property Due Diligence in Mergers and Acquisitions29

22 Waiting Period in Merger 32

23 CASE - Tata & Corus Acquisition33

24 Prime Time Matters45

25 Epilogue 56

Documents

Roll No. 34- Amit Chaturvedi