The Desire deal of Tata Corus

1. TATA – CORUS “DESIRE DEAL”???
Presented BY
Shreyas
Vaishnavi
Suneetha Fernandes
Rakshith kumar
Vinitha

2. HORIZONTAL ACQUISITION OF CORUS BY TATA
STEEL

3. COMPANY PROFILE (TATA)
• Established in 1907, Tata Steel is one among the top global steel companies
• It is now one of the world's most geographically-diversified steel producers,
with operations in 26 countries and a commercial presence in over 50
countries.
• Vision - the world’s steel industry benchmark through the excellence of its
people, its innovative approach and overall conduct
• Tata Steel invested in various other businesses as well such as Oil mills,
Airlines, Publishing, Motors, Consultancy services etc.

4. COMPANYPROFILE (CORUS)
• CORUS was formed on 6th October 1999.It is Europe’s second largest
steel producer with a production of 18.2 million tones and revenue of 9.2
billion.
• Major manufacturing sites in UK, Netherlands, Germany, France and
Belgium & sales/offices centers in over 40 countries
• The product mix consisted of Strip steel products, Long products,
Distribution and building system and Aluminium.
• The Corus was having leading market position in construction and
packaging in Europe with leading R&D
• The Corus was the 9th largest steel producer in the world. It opened its bid
for 100 % stake late in the 2006.

5. The Tata-Corus Deal
• Tata acquired Corus on 2nd April 2007
• The deal price was US $ 12.04 Billion
• On 17th Oct 2006 Tata bid was priced at 455 pence per Share
(Share Market Price per share at that time was 390 pence)
• TATA acquired 100% stake in the Corus Group at 608 pence
• TATA paid 68% Premium over the average closing market
share price over the twelve month period.

6. Counter Bid by CSN
(Companhia Siderurgica Nacional)
• Tata Steel has made its offer to 455p per share
• The Brazilian Steel Group CSN made counter bid 475p per share
• Within hours Tata Steel increasing its original bid for Corus to 500
pence per share
• Brazil's CSN made its counter bid for Corus at 515 pence per share in
cash, 3% more than Tata Steel's Offer.
• Finally TATA manages to win the battle over CSN by bidding 608p
per share.

7. SWOT analysis of Tata before merger
Strengths
• Access to raw materials
• Strong brand value
• Good Corporate
governance
Weaknesses
• High debt loads
• Operational Inefficiencies
• Low demand for existing
products
• Less products innovations
Opportunities
• Competitive advantage by
value of size
• Access to Corus talent pool
• Growth of Infra sector in
India
• Higher pricing
opportunities in foreign
markets
Threats
• Advancing technology
• International competition
• Rising prices of coal

8. SWOT analysis of Corus
Strength
• Wide range of products of high
technology
• World’s ninth largest and
Europe’s second largest
company
Weakness
• Lack of access to raw material
• High operational cost
Opportunities
• To get access to raw material
through merger
• To decrease the overlapping
cost of value chain
Threat
• Increase in losses result in
winding up of company

9. Strengths of TATAafter merger
• Tata was one of the lowest cost steel producer in the world.
• Self-sufficiency in raw material.
• Strong retail and distribution network in India and South East
Asia.
• Powerful combination of high quality developed and low cost
high growth market.
• Strong culture fit between the two organizations both of which
highly emphasized on continuous improvement and ethics.

10. Why did Corus accept the bid by Tata
Steel?
• Backward integration
• Overcome the problems of saturation stage
• Economies of scale
• Increase the revenue of the company
• Reduce the cost of labour
• Excess of loan

11. Reasons for Tata Steel to bid for Corus
• Expand the market and growth
• Be one of the top companies
• Overcome the weakness
• Economies of scale
• Tap the European market
• Wealth maximisation
• Have a separate research unit

12. Post-Acquisition
• Tata Steel has formed seven- member integration committee to
spearhead its union with Corus group
• Tata’s new debt has increased amounting to $8 billion
• Tata share fell by 10.7% on the Bombay stock market
• Tata steel group has rose to 5th position from 56th in the global level
• Standard and poor credit rating – BB TO BBB
• Acquisition bought Tata to world platform and to excess new market
in global level

13. Synergies between the two companies
• Technology transfer and cross-fertilization of R&D capabilities
between the two companies that specialized in different areas.
• Strong culture fit between the two organizations both of which
highly emphasized on continuous improvement and ethics.
• Economies of scale and increase in profitability.
• Acquisition would result in powerful combination of high
quality and low cost growth markets.

14. Did Tata Overbid For Corus?
A) Viewpoint of Financial analyst
• Financial analysts familiar with the acquisition are of
the viewpoint that Tata Steel overpaid for Corus.
• Post acquisition Tata Steel’s share price fell by 10.7
percent to Rs. 463.95 in the Bombay Stock Exchange.
• Tata Steel picked up the responsibility of ensuring the
funding of over 47,000 pension funds of Corus’s
employees.

15. Conti….
B) Viewpoint of Tata Steel’s Executives
• Tata Steel executives are of the opinion that there were many
favorable strategic and financial outcomes to be realized.
• The acquisition added 19 million tons of production capacity and
savings of $350 million .
• Potential to create cross-fertilization of R&D capabilities in the
automotive, packaging and construction sectors with transfer of
technology, best practices and personnel from Europe to India.
• Cash flows generated post merger would be more than sufficient
to meet the debt incurred due to the acquisition.

16. Corus is now TATA steel Europe
• Head quarters - Landon
• Product – Steel products and services
• Markets – Consumer products, energy and power
packaging, automobile, aerospace and other small
industries.
• Recent Update – improving the products using decoiler of
11 millon pound.

17. Financial report

18. Financial Report

19. Learning from the deal
• Growth and development
• Better performance
• Wealth maximisation
• Recognition in the global market
• Learning experience
• Be a leader by initiating