2. M&A
An aspect of corporate strategy
corporate finance
and management dealing with the
buying, selling, dividing and
combining of
different companies and
similar entities that can help an
enterprise grow rapidly.
3. Tata steel
Tata Steel has established by Indian Parsi Businessman
Jamsetji Tata.
'Tata Steel', formerly known as TISCO (Tata Iron and
Steel Company Limited), was the world's 56th largest and
India's 2nd largest steel company with an annual crude steel
capacity of 3.8 million tonnes.
Tata played a vital role in the improvement of steel
production also. For that reason in the development of India’s
economy.
4. Corus steel
• Corus Group plc was formed on 6th October 1999,through the
merger of two companies, British Steel and Koninklijke
Hoogovens.
• Headquarters in London,
• Its core business : manufacturing, development and allocation
of steel and aluminum products and services.
6. Strategizing growth
• “There are not many opportunities for
producers in emerging low-cost markets to
gain access to the markets of Europe
other than by acquiring a company like
Corus,”
John Quigley
(Editor, Industry Publication Steel week)
8. The Deal
• This deal is a 100% acquisition
• The new entity will be run by one
of Tata’s steel subsidiaries.
• As stated by Tata, the initial motive
behind the completion of the deal was not Corus’
revenue size, but rather its market value.
• Corus is larger in size compared to Tata, the
company was valued less than Tata (at
approximately $6 billion) at the time when the deal
negotiations started.
9. Reasons for TATA Steel to Bid
• Tap the European Market.
• Helped TATA feature in the top ten players
of the world.
• Technology benefit.
• Economies of scale.
• Leverage
10. • “It’s a tremendous strategic acquisition. I
believe this will the first step in showing that
Indian industry can in fact step outside the
shores of India in an international marketplace
and acquit itself as a global player”
11. • A chance to bail out of debt and financial
stress.
• Access to lower cost resources.
• Corus had a high cost of production.
• Low profit margin.
Reasons for Corus to be sold
12. Synergies
Cost benefits
Emerging Growth
Technology transfer and cross fertilization of
R&D
Strong culture fit
13. Addressing the cross cultural concerns
Tata Steel approached the Corus acquisition with full
awareness of the concerns that might arise due to
cultural and racial obstacles caused by British
employees resentful of having managers from India.
14. Ascending in the global market
• Judging from the reaction of the popular press in
India, Tata Steel’s acquisition of Corus was hailed as a
bold and visionary move.
• This acquisition did a lot to bolster the confidence
levels Indian firms to seek overseas targets.
• Financial performance: The share price reflected the positive
sentiment (rose up by 27% on BSE in 2007)
• S&P upgraded its ratings and changed it into “Positive
Outlook”.
Thus, it became one of the largest players globally.
15. Our take
• We believe that the acquisition
of Corus has been timely.
• Given the rising momentum of
consolidation in the industry
and rising valuations of steel
companies, had Tata Steel not
acted when it did, the
opportunity could have been
lost forever.
