8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 1/24
TATA & CORUS
Date – 24th July, 2011
1
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 2/24
ADNAN ZAFAR BEM-1047
WAQAS AHMED BEM/973
IRFAN BADAR BME-958RAJESH KUMMAR BEM-1046
2
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 3/24
MERGER & ACQUISITION
3
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.
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 4/24
Types of Mergers.
4
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
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 5/24
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
5
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 6/24
6
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
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 7/24
VISION TATA STEEL We aspire to be the global steel industry
benchmark for value creation and corporatecitizenship
7
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 8/24
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 .
8
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 9/24
WAQAS AHMEDBEM/973
9
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 10/24
COUNTRIES TO GLOBAL
STEEL INDUSTRY
10
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 11/24
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
11
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 12/24
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 13/24
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
13
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 14/24
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.
14
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 15/24
IRFAN BADAR BME-958
15
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 16/24
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.
16
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 17/24
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
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 18/24
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
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 19/24
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 20/24
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 21/24
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
21
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 22/24
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.
22
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 23/24
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
23
8/13/2019 presentationontatacorus-110725072939-phpapp02
http://slidepdf.com/reader/full/presentationontatacorus-110725072939-phpapp02 24/24
24