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TATA & CORUS

Date – 24th July, 2011

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ADNAN ZAFAR BEM-1047

WAQAS AHMED BEM/973

IRFAN BADAR BME-958RAJESH KUMMAR BEM-1046

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MERGER & ACQUISITION

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Mergers- A merger is a combination of twocompanies into one larger company.

Acquisition - When one company takes overanother and clearly established itself as thenew owner, the purchase is called anacquisition.



Types of Mergers.

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Horizontal merger

Two companies that are in direct competition andshare the same product lines and markets.

Vertical merger A customer and company or a supplier andcompany. Think of a cone supplier merging withan ice cream maker.

ConglomerationTwo companies that have no common businessareas. There are two types of mergers that aredistinguished by how the merger is financed.

Each has certain implications for the companies



Market-extension merger

Two companies that sell the same products indifferent markets.

Product-extension mergerTwo companies selling different but relatedproducts in the same market.

Product extension merger

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TATA-CORUS

Tata acquired Corus, which is four timeslarger than its size and the largest steel

producer in the U.K. The deal, which createsthe world's fifth-largest steelmaker, is India'slargest ever foreign takeover and followsMittal Steel's $31 billion acquisition of rival

Arcelor in the same year. Tata acquired Corus on the 2nd of April 2007

for a price of $12 billion. The price per sharewas 608 pence(rs 484), which is 33.6% higher

than the first offer which was 455 pence.

Acquisition



VISION TATA STEEL We aspire to be the global steel industry

benchmark for value creation and corporatecitizenship

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Tata Steel Background Tata Steel a part of the Tata group, one of the

largest diversified business in india.

Founded in 1907, by Jamshed Ji NusserwanjiTata.

In feb 2005 acquired singapore based NatsteelLtd.

In dec 2005 acquired thaialand Millennium steel .

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WAQAS AHMEDBEM/973

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COUNTRIES TO GLOBAL

STEEL INDUSTRY

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Global Steel ranking

Company Capacity(in million tonnes)

Arcelor - Mittal 110

Nippon Steel 32

Posco 30.5

JEF Steel 30

Tata Steel - Corus 27.5

Bao steel China 23

US Steel 19

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Objectives of Acquisition Higher profitability Global No. 5 company

By 2012, expected production of 40 million tonnesgiving it the position of Global number 2.

To gain access to global steel market and expandproduction capacity to keep pace with growingdemand for steel

Jim Leng, Chairman of Corus“This offer from TataSteel reflects the substantial value created for Corusshareholders

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Objectives of Acquisition TATA looking for mature market in Europe for its

finished products

Corus holds a number of patients and R & Dfacility.

Cost of Acquisition lower than setting up a greenfield plant and marketing and distribution channel.

Corus wanted to reduce its employees cost and

TATA is well known for handling its laboursefficiently.

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IRFAN BADAR BME-958

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The DEAL..

Officially announced on April 2nd 2007.

TATA’s motive is to capture the market value.

Total value of this acquisition was $12 Billion (608

pence per share except 603 per share).

Corus gained profitable opportunity to exit and a

buyer for some time.

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Ups and down Sep 20, 06 : CORUS uses the strategy to work with low cost

producer.

Oct 06, 06 : Initial offer by TATA is considered to be too low.

Oct 17, 06: TATA kept its offer to 455 pence per share.

Oct 20, 06 : CORUS accepts the offer of £4.3 billion.

Oct 23, 06 : Brazilian Steel Group CSN counter-offer to TATA’s offer. Oct 27, 06 : CORUS criticized by JCB for acceptance of TATA’s

offer.

Nov 18, 06 : The CSN approaches Corus With an offer of 475 penceper share

Nov 27, 06 : Board of Corus decides to give more time forshareholders to decide whether it issue forward a formal offer.

Dec 18,06 : Tata increases its original bid for Corus 500 pence pershare, then CSN made its counter bid at 515 pence per share incash

Jan 31, 07 : Tata had agreed to offer Corus investors 608 pence per17



TATA After Acquisition

Seven member team for this DEAL.

TATA has to pay $12 billion, where 2/3rd was being

financed. After the bidding conflict with CSN, TATA ended up

paying more to CORUS.

Still TATA earned operating profits of $840 million on

sales of 5.3 million tonnes of steel, while CORUS

earned $860 million on sales of 18.6 million tones of18







Swot Analysis Opportunity

Consolidation trend in Steel Industry

CSN’s lost image after failure of 2002 negotiations

To get exposed to global steel market

Threat Brazil company CSN

Russian company Severstal No committed financers to support the possible deal

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Loss in quarter 1 of 2009 - 2010

TATA Steel posted a consolidated net loss (includingCorus) of Rs 2,209 crore ($461 million).

Incurred a profit of Rs 3,901 crore ($814 million ) in the April-June quarter of FY’09.

Sales volume of Indian operations was higher by 22percent but sales from its European operations (Corus)fell heavily.

Group consolidated turnover was Rs.23,292 crores ascompared to Rs. 43,496 crores.

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Conclusion

“ I bel ieve this w i l l be the f irs t step in show ing

that Indian industry can step outs ide the

shores of India in an internat ional market

place and acqu i t i tsel f as a global player”

-

Ratan Tata

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