Date – 24th July, 2011

TATA & CORUS

1

ADNAN ZAFAR BEM-1047 WAQAS AHMED BEM/973 IRFAN BADAR BME-958 RAJESH KUMMAR BEM-1046

2

 Acquisition . the purchase is called an acquisition. 3 .A merger is a combination of two companies into one larger company.MERGER & ACQUISITION  Mergers.When one company takes over another and clearly established itself as the new owner.

Types of Mergers. Think of a cone supplier merging with an ice cream maker.  Conglomeration Two companies that have no common business areas. There are two types of mergers that are distinguished by how the merger is financed. Each has certain implications for the companies .  Vertical merger A customer and company or a supplier and company.  Horizontal merger 4 Two companies that are in direct competition and share the same product lines and markets.

 Product extension merger 5 . Market-extension merger Two companies that sell the same products in different markets.  Product-extension merger Two companies selling different but related products in the same market.

6% higher than the first offer which was 455 pence. is India's largest ever foreign takeover and follows Mittal Steel's $31 billion acquisition of rival Arcelor in the same year.K. The deal. which is 33.  Tata acquired Corus on the 2nd of April 2007 for a price of $12 billion. which is four times 6 larger than its size and the largest steel producer in the U.Acquisition  TATA-CORUS  Tata acquired Corus. which creates the world's fifth-largest steelmaker. The price per share was 608 pence(rs 484). .

VISION TATA STEEL  We aspire to be the global steel industry benchmark for value creation and corporate citizenship 7 .

Tata Steel Background  Tata Steel a part of the Tata group.  Founded in 1907. by Jamshed Ji Nusserwanji Tata. 8 . one of the largest diversified business in india.  In dec 2005 acquired thaialand Millennium steel .  In feb 2005 acquired singapore based Natsteel Ltd.

WAQAS AHMED BEM/973 9 .

COUNTRIES TO GLOBAL STEEL INDUSTRY 10 .

Corus Bao steel China US Steel 30 27.Global Steel ranking Company Arcelor .Mittal Nippon Steel Posco Capacity(in million tonnes) 110 32 30.5 23 19 11 .5 JEF Steel Tata Steel .

Aluminum and Distribution.142 million annual revenue and work force of 50.000 employees . Consist of four divisions : Strip products. through merger of 2      12 companies : British Steel and Koninklijke Hoogovens. Development and Allocation of Aluminum and Steel products and services Wide variety of products and services Largest steel producer in UK with £10. Long products.Corus Steel Industry  Formed on 6th Oct 1999. Building system Operates as an International company Core business in Manufacturing.

Objectives of Acquisition  Higher profitability  Global No. 5 company  By 2012. expected production of 40 million tonnes giving it the position of Global number 2. Chairman of Corus“This offer from Tata Steel reflects the substantial value created for Corus shareholders 13 .  To gain access to global steel market and expand production capacity to keep pace with growing demand for steel  Jim Leng.

 Cost of Acquisition lower than setting up a green field plant and marketing and distribution channel.  Corus wanted to reduce its employees cost and TATA is well known for handling its labours efficiently.Objectives of Acquisition  TATA looking for mature market in Europe for its finished products  Corus holds a number of patients and R & D facility. 14 .

IRFAN BADAR 958 BME- 15 .

 Total value of this acquisition was $12 Billion (608 pence per share except 603 per share).The DEAL.  TATA’s motive is to capture the market value.  Corus gained profitable opportunity to exit and a buyer for some time. 16 .  Officially announced on April 2nd 2007..

Oct 27. then CSN made its counter bid at 515 pence per share in cash Jan 31. Oct 23. 06 : CORUS uses the strategy to work with low cost         17  producer. Oct 17. 07 : Tata had agreed to offer Corus investors 608 pence per . 06 : The CSN approaches Corus With an offer of 475 pence per share Nov 27. Nov 18.3 billion.06 : Tata increases its original bid for Corus 500 pence per share. 06 : Board of Corus decides to give more time for shareholders to decide whether it issue forward a formal offer. 06 : Initial offer by TATA is considered to be too low. 06 : CORUS criticized by JCB for acceptance of TATA’s offer.Ups and down  Sep 20. Oct 06. 06 : Brazilian Steel Group CSN counter-offer to TATA’s offer. 06 : CORUS accepts the offer of £4. Dec 18. 06: TATA kept its offer to 455 pence per share. Oct 20.

while CORUS 18 earned $860 million on sales of 18.6 million tones of . TATA ended up paying more to CORUS.  TATA has to pay $12 billion. where 2/3rd was being financed.TATA After Acquisition  Seven member team for this DEAL.3 million tonnes of steel.  After the bidding conflict with CSN.  Still TATA earned operating profits of $840 million on sales of 5.

RAJESH KUMMAR 1046 BEM- 19 .

 Weakness  Corus was triple the size of TATA steel in terms of production.  Experience of TATA group in doing global activity.  Stable balance sheet (Low Debt to Equity Ratio).SWOT Analysis for TATA  Strength  Lowest cost producer in world. 20 .

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 .

496 crores.  Incurred a profit of Rs 3.23.  Sales volume of Indian operations was higher by 22 percent but sales from its European operations (Corus) fell heavily.209 crore ($461 million).Loss in quarter 1 of 2009 .2010  TATA Steel posted a consolidated net loss (including Corus) of Rs 2. 22 .  Group consolidated turnover was Rs.292 crores as compared to Rs. 43.901 crore ($814 million ) in the April-June quarter of FY’09.

Conclusion “ 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 23 .

24 .