Muthuraman accepted that the deal may look expensive but was in fact in the strategic interests of both companies allowing tata steel access to corus s markets and corus the. This paper is an attempt to find out future prospect of tata steel after acquisition this study is also going to discuss about challenge ahead of tata. The model canrefined by forecasting reoi considering the steel industry data and outlook. It was acquired by tata of india in 2007, and renamed tata steel europe. Tata corus deal becomes effective april 02, 2007 18. Consolidated financial results of tata steel for the year 200607 do not include the financial performance of. This research paper is an attempt to analyze the valuation of the merger deal under consideration tata corus and the pre as well as post merger situation of two companies. Corus acquisition was that tata steel would be able to couple lowcost fabricating in india with corus finishing plants, and would moreover have got to highend markets in europe. Be that as it may, there were a number of challenges, as tata steel needed to extend the productivity of the corus plants which only generated a working benefit of. Financing the corus acquisition asian case research. Corus ukraine llc 100 corus uk healthcare trustee ltd.
List of subsidiaries of tata steel ltd as on 31 march 2018 company name shareholding % whitehead narrow strip ltd. Scribd is the worlds largest social reading and publishing site. It was an all cash deal and financing was done by a mixture of debt and equity. But with the subsequent slump in steel demand, corus later renamed as tata steel europe, the acquisition turned bad and it had lived off tata. Feb 06, 2007 the deal makes tata corus combined entity the fifth largest steel maker in the world. On november 19, 2006, the brazilian steel company csn launched a counter offer for corus at 475 pence. Tata steels failure with corus and tata motors success. Corus group, a european steel manufacturer headquartered in the uk. The horizontal acquisition is made on corus group by tata steel. Some of the failure of tata steel europe was due to the financial meltdown which started in late 2008. Pdf a case study of tata and corus merger international.
Complementarities in scale, market geography, financials, technology and raw materials offered a strong rationale for the deal. Tata steel chairman n chandrasekaran defends acquisition of corus steel 08 aug, 2017, 06. These megadeals involving acquisitions by emerging economy firms have attracted. The prediction of future forecasted sales and other variables, gains and losses from the deal are the key areas or principal governing factors to be taken care of. Oct 29, 2008 the deal occurred through 9 rounds of competitive bidding between tata steel and brazilian steel maker csn. A study on profitability analysis in post acquisition of. Apr 21, 2017 irani, who held the position of the md of tata steel for nearly a decade, said that the indian company emerged as a white knight while acquiring corus in 2007 when the global steel market was good. Dec 11, 2006 tata corus deal running into quicksand. Acquisition of jlr by t ata was one of the rarest cases.
Lessons tata steel learnt from its corus acquisition, or not. Csn is a brazilian steel maker but ultimately tata won. Tatas corus deal raises fears about likely heavy debt load wsj. Tata steel jumped from 56th to fifth largest steel manufacturer in. Not that it is the biggest deal ever from an emerging market. Whether the tatas are paying a inflated price for corus will remain a subject of debate for some time. This deal is a 100% acquisition and the new entity will be run by one of tata s steel subsidiaries. The stories are about tata steels acquisition of anglo dutch major corus and tata motors buyout of jaguar land rover jlr of the uk. Conclusionfrom the analysis of corus and tata steel financial statements, we can conclude that tata steelpaid more than 120% premium over the intrinsic value using sf2 model. For both india and tata steel, the biggest foreign acquisition to date was that of the corus group, a european steel manufacturer headquartered in the uk.
An analysis of the impact of merger and acquisition of. Now it has further cut its european exposure by combining the business with thyssenkrupp. Mar 30, 2016 with the corus acquisition, tata steels annual capacity grew to 25 million tonnes from 8. Further, additional synergies can be secured by integrating the operations of both the entities to the extent possible. Proceeding of the deal negotiations, both the tata and corus were interested to create a corporate bondage by entering into an merger and acquisition deal due to the diversified reasons.
In 2006, the tata first offered 455 pence per share of corus but by the end of the bidding process in 2007, tata offered 608 pence per share, which is 33. Timelines of deal on october 20, 2006, tata steel announced that it had agreed to pick up a 100% stake in the anglodutch steel maker corus at 455 pence per share in an all cash deal, cumulatively valued at gbp 4. Pre and post merger valuation a study of tata corus. In 2005, tata steel was the worlds 56th biggest steel producer. Tata steels failure with corus and tata motors success with. Tatas set off process to finance corus deal the economic times.
The deal also gave it access to the european markets. Cultural issues in tata corus acquisition free essays. The merger dealthe deal between tata and corus was officially announced on april 2nd, 2007 at a price of 608 pence per ordinary share in cash. After a prolonged bidding war with the brazilian steelmaker csn, tata steel purchased. Jan 14, 20 timelines of deal on october 20, 2006, tata steel announced that it had agreed to pick up a 100% stake in the anglodutch steel maker corus at 455 pence per share in an all cash deal, cumulatively valued at gbp 4.
Mar 31, 2012 analysis of corus acquisition by tata steel10. Tata steels desire to get rid of its uk business shows how. An analysis of the impact of merger and acquisition of corus. This case study is based on secondary data including company reports, financial performances, newspapers articles, magazines, and the web. A case study business economics business management. The final deal valued corus at 607 pence per common share which was 67% higher than the price of corus before the deal was announced. In 2005, when the deal was started the price per share was 455 pence. Pre and post merger valuation a study of tata corus merger deal. Tata group, the corus deal emerged as one that can be counted as noose in the neck. For both india and tata steel, the biggest foreign acquisition to date was that of the. Tata s security credit rating is investment grade, whereas the new subsidiary may not be. Tatacorus deal running into quicksand times of india.
Tata steels acquisition of corusfinancecase studycase studies. Tata corus deal deal analysis mergers and acquisitions submitted toprof manish popli submitted by. On october 20, 2006 the board of directors of anglo dutch steelmaker corus accepted a. Tata corus deal the wider implication the economic times. Tata corus deal mergers and acquisitions companies. Tatas set off process to finance corus deal the economic. This will improve tata steel s bargaining position both with the suppliers as well as with its customers. Feb 14, 2007 the tata group is celebrating its acquisition of the anglodutch steel firm corus, and the catapulting of tata steel into world steels bigfive status by revenue. Tata steel completed acquisition of corus on 2 april 2007, at the peak of the boom that ended with the global financial crisis in 2008, from which the world economy never recovered. This paper is an attempt to find out future prospect of tata steel after acquisition this study is also going to discuss about challenge ahead of tata in the area of cross cultural management. Sep 01, 2016 the following study focuses on the key motive drivers and evaluates the impact of corus acquisition by tata steel from being perceived as a winwin deal to a deal from hell. I tried to cover each and every moment that happend during and after the deal. Tata steel announced the acquisition of corus group in october 2006. While the indian industry lauded tata steels move, there was national debate about whether tata steel had overpaid for the corus acquisition.
Tata steel acquiring corus plc xavier university bhubaneswar. The corus acquisition moved tata steels position to sixth place among the worlds largest steel producers. The biggest problem, tata steel and its investment bankers are trying to tackle is the availability of a set of loans plus a schedule for paying them back, that would take into account corus s complex mix of liabilities from its plants in the uk and the netherland, plus from its. In addition, tata sons owns more than half the capital in. In a period of seven years corus was involved in 14 deals apart from tata.
On january 31, 2007, tata steel limited tata steel, one of the leading steel producers in india, acquired the anglo dutch steel producer corus group plc. Finalizing the deal proved challenging, as tata steel entered a bidding war with the brazilian steel manufacturer companhia siderurgica nacional csn. Tata corus is not different from above discussion and feasibility of this deal is a question mark in view of several financial experts. Many companies, including arcelormittal, explored the option. The deal would have transferred some of the debt to the joint venture, allowing tata steel to sharpen its focus on ramping up its indian business. Tata steel sweden byggsystem ab 100 tata steel special economic zone ltd. Tata corus deal free download as powerpoint presentation.
Tatas corus deal raises fears about likely heavy debt. In a period of seven years corus was involved in 14 deals. The purchase of corus was the biggest foreign acquisition by an indian company up to that time. This process started in the year 2000 and with tata it came to an end. This combination with tata, for corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms, he said. The deal was the largest indian takeover of a foreign company at. Oct 20, 2006 corus chairman jim leng said the deal was the culmination of talks with firms in brazil, russia and india. During the last decade, tata steel took forward plans to hone their growth as a steel manufacturer through a series of global acquisitions. Feb 01, 2007 what the corus deal means to tata chairman ratan tata talks about his plans for integrating the steel company and increasing the groups presence on the world stage february 1, 2007, 9. The tata steel was made long term financing pattern for the net acquisition consideration of corus would be usd 12. List of subsidiaries of tata steel ltd as on 31 march 2018.
594 674 1232 1307 133 174 818 32 1102 1254 301 528 796 187 750 306 627 1008 651 523 198 456 279 276 404 674 1234 816 347 735 904