Slide 3: 

LEVERAGED BUYOUTS

Slide 4: 
LBO : MEANING Acquisition of a target company with a substantial portion of borrowed funds Leverage : Significant use of
debt for financing the transaction Buyout : Gain of control of majority of the target company’s equity It is also known as private
equity A technique of corporate restructuring Average life of 3-7 years after which investors take the firm public Investors seek
return in excess of 20 % on its investment Leverage usually ranges from 6:1 to 12:1

Slide 5: 
LBO : ADVANTAGES & DISADVANTAGES ADVANTAGES DISADVANTAGES Flexible structure of financing Tax shield
Larger levels of debt - increased risk Too high a price asked for by a seller Lay-offs increase Long-term growth disrupted as
company focuses on short-term goal of reducing debt at the cost of R&D Dilution in equity and increase in number of owners
raises conflict in management Discipline of debt helps leads to divesting non-core business cost-cutting Synergy and efficiency
gains

Slide 6: 
LBO : FINANCING The various sources of LBO financing are: LOAN STOCK SENIOR DEBT SUBORDINATED DEBT
MEZZANINE FINANCING PREFERENCE SHARES ORDINARY SHARES ESOPs BRIDGE FINANCING BANK
FINANCING

Slide 7: 
A CASE STUDY OF TATA-CORUS

Slide 8: 
OVERVIEW OF ACQUIRER Name : Tata Steel Former Name : Tata Iron and Steel Company Limited Founded : 1907 Type :
Public (BSE: 500470) Headquarters : Jamshedpur, Jharkhand, India Chairman : Ratan Tata Founder : Jamsetji Nusserwanji Tata
Industry : Steel Parent : Tata Group Logo :

Slide 9: 
OVERVIEW OF TARGET Name : Corus Founded : 1999 Type : Subsidiary Headquarters : London, England, U.K. CEO : Kirby
Adams Formation : Merger of British Steel Corporation and Koninklijke Hoogovens N.V. Industry : Steel Parent : Tata Steel,
member of Tata Group Logo :

Slide 10: 
THE DEAL Official Announcement : April 2nd, 2007 Price of Deal : 608 pence per ordinary share in cash Total Value of the
Deal : £6.2 billion (US $12 billion) Deal Competitor : Companhia Siderurgica Nacional (CSN) Competitor’s Bid: 603 pence per
share Deal process commencement : September 20, 2006 Deal process completion : July 2, 2007

Slide 11: 
COMBINED AMBITION Become a global player with a balanced presence in developed European and fast growing Asian
markets Acquire strong positions in construction, automotive and packaging market sectors Significant raw material security and
greenfield / brownfield developments Lowest cost position in Europe and South-East Asia Own developmental plans Current :
EBITDA of 13% ; 25 million tonnes : # 6 By 2012 : EBITDA of 25% ; 40 million tonnes : Potential # 2 DOUBLE THE SIZE
AND PROFITABILITY

Slide 12: 
DEAL : INVESTMENT VEHICLE A holding company was set up by Tata Steel in Singapore to acquire Corus. Idea was to have
all the foreign acquisitions under one holding company. Singapore has a favourable tax jurisdiction and gave Tata Steel an easy
avenue for raising global resources/funds. TATA STEEL INDIA TATA STEEL ASIA HOLDINGS (SINGAPORE) TATA
STEEL U.K. CORUS GROUP LTD. U.K.

Slide 13: 
DEAL : FINANCING STRUCTURE

Slide 14: 
DEAL : FINANCING STRUCTURE
Slide 15: 
POST-ACQISITION INTEGRATION COMMITTEE

Slide 16: 
CULTURAL INTEGRATION

Slide 17: 
EFFECTS OF THE DEAL ENHANCED PRODUCT PORTFOLIO RAW MATERIAL SELF-SUFFICIENCY

Slide 18: 
EFFECTS OF THE DEAL ENHANCED CUSTOMER REACH

Slide 19: 
EFFECTS OF THE DEAL ACCESS TO NEW MARKETS

Slide 20: 
RANKING RANKING AS PER CAPACITY RANKING AS PER PRODUCTION

Slide 21: 
CONCLUSION Ratan Tata, Chairman of Tata Steel, said: “This acquisition represents a defining moment for Tata Steel and is
entirely consistent with our strategy of growth through international expansion. Corus and Tata Steel are companies with long,
proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology,
efficiency, product mix and geographical spread. Together we will be even better equipped to remain at the leading edge of the
fast changing steel industry.”

Slide 22: 
LEVERAGED BUYOUTS … A Case Study of Tata - Corus THE END

It is a takeover which goes against the wishes of target company's management or

board.
How it works?
There are two ways - The TENDER OFFER and PROXY FIGHT

A tender offer is a public bid for a large chunk of the target's stock at a fixed price,
usually higher than the current market value of the stock. The purchaser uses a
premium price to encourage the shareholders to sell their shares. The offer has a time
limit, and it may have other provisions that the target company must abide by if
shareholders accept the offer.
  In a proxy fight, the buyer doesn't attempt to buy stock. Instead, they try to convince
the shareholders(by giving then night party) to vote out current management or the
current board of directors in favor of a team that will approve the takeover. The term
"proxy" refers to the shareholders' ability to let someone else make their vote for them
-- the buyer votes for the new board by proxy.

Examples:

 The most famous recent proxy fight was Hewlett-Packard's takeover of Compaq.
The deal was valued at $25 billion, but Hewlett-Packard reportedly spent huge sums on
advertising to sway shareholders.(like giving them party and gifts and so on..............
(Censored)). - Successful
 Swaraj Paul’s failed bid for Escorts and DCM (1984);- Failed
 ICI’s attempt to takeover Asian Paints (1997); - Failed
 India Cements/ Raasi Cements (1998); and - Successful
 The Dalmia group’s purchase of stake in GESCO’s real estate company (2000).-
Failed