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					TATA & CORUS: A Case Of Acquisition



• • • • FOUNDER- JAMSHEDJI YEAR- 1907 PLACE- SAKCHI ON WESTBENGAL Tata steel is the 55th in production of steel in world • The Tata steel was having its capacity expansion with its indigenous projects to the tune of 28 million tones.

• IN 1973 it took over flux mines and collieries near jharia. • In 1983 it acquired Indian tube company Ltd. • In 1991 acquired ferro-chrome unit of OMC alleys Ltd. Near Bamnipal in orissa • In feb 2005 acquired singapore based Natsteel Ltd. • In dec 2005 acquired thaialand Millennium steel .

Corus Steel Industry
• Formed on 6th Oct 1999, through merger of 2 companies : British Steel and Koninklijke Hoogovens. • Consist of four divisions : Strip products, Long products, Aluminum and Distribution, Building system • Operates as an International company • Core business in Manufacturing, Development and Allocation of Aluminum and Steel products and services • Wide variety of products and services • Largest steel producer in UK with £10,142 million annual revenue and work force of 50,000 employees

Valuing the Acquisition
• Method used Enterprise Value Multiple. • Enterprise value (EV) represents a company's • economic value -- the minimum amount someone • would have to pay to buy it outright. • EV = Mkt Cap. + Pref. Stcks + Min. interest + Long Term debt – Cash & cash Equivalent

Valuing the Acquisition
• EV = Mkt Cap. + Pref. Stcks + Min. interest + Long Term debt - Cash Equivalent 3.5 billion + 0 + 26 million + 1308 million – 871 million =£ 3.963 billion. EBITDA = £ 947 Million(From Con. Operations)

The Highlights:
• On October 17, 2006 Tata steel made an offer of 455 pence a share in cash valuing the acquisition deal at US$ 7.6 billion. • CSN(Companhia Siderúrgica Nacional) reacted quickly making a counter bid of 475 pence per share on November 17, 2006. • So an auction was initiated, after nine rounds of bidding on January 31, 2007 Tata emerged winner in the auction with its final bid of 608 pence per share for

Global Steel ranking
Company Arcelor - Mittal Nippon Steel Posco
JEF Steel

Capacity(in million tonnes) 110 32 30.5

Tata Steel - Corus Bao steel China US Steel

27.5 23 19

TATA After Acquisition
• Seven member team for this DEAL. • TATA has to pay $12 billion, where 2/3rd was being financed. • Immediate effect on TATA.(10.7%) • 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 tonne of steel, while CORUS earned $860 million on sales of 18.6 million tones of steel.

“ I believe this will be the first step in showing that Indian industry can step outside the shores of India in an international market place and acquit itself as a global player” Ratan Tata