Tata Corus acquisition

Merger & Acquisition

1. Group2 Sameep Kunja (2011SMN6501) Anita Singh (2011SMN6504) Leena Sadhu (2011SMN6538) Piyush Bajpayee (2011SMN6539) Souptik Sarkar (2010CEC3850) Tata-Corus Acquisition DMS, IIT Delhi Course : SML730 Organisation Management

2. Former Name : Tata Iron and Steel Company Parent : Tata Group Type : Public BSE (500470) Founded : 1907 Chairman : Ratan Tata Industry : Steel Course : SML730 Organisation Management DMS. IIT Delhi Overview of the Acquirer Founder : Jamshedji Tata 1 2 3 4 5 6 7 8 Headquarter : Jamshedpur, Jharkhand, India

3. Name : Corus Parent : Tata Steel, member of Tata Group Type : Subsidiary Founded : 1999 CEO : Kirby Adams Industry : Steel Course : SML730 Organisation Management DMS. IIT Delhi Overview of the Acquired Formation : Merger of British Steel Corporation & Koninklijke Hoogovens N.V. 1 2 3 4 5 6 7 8 Headquarter : London, England, UK

4. Course : SML730 Organisation Management DMS, IIT Delhi Reasons for Acquisition

5. To tap European mature market Cost of acquisition is lower than setting up green field plant and marketing and distribution channel. Tata manufactures low value long and fast steel products while Corus produced high value stripped products Reasons for Bid from Tata Steel

6. Acquisition would help Tata to feature in top 10 players in the world. Technology benefit Economies of scale Corus held a number of patents and R&D facilities Reasons for Bid from Tata Steel

7. Saturated market of Europe To extend its global reach through Tata To get access to low cost Indian Ore reserves Decline in market share and profit Total debt of Corus was 1.6 Bn GBP Facilities were old with high cost of production Reasons From Corus to accept the Tata Bid

8. Course : SML730 Organisation Management DMS, IIT Delhi How the Acquisition was Implemented

9. Tata acquired Corus on 2 nd April 2007 The deal price was US $ 12.11 Billion On 17 th Oct 2006 Tata bid was priced at 403 pence per share (Market Price per share at that time was 390 pence) Tata Steel winner of the auction for Corus declares a bid of 608 pence per share Tata surpassed the financial bid from Brazilian Steel Maker – COMPAHNIA SIDDERUGGICA NACIONAL (CSN) – of 603 pence per share The Tata-Corus Deal Statistics

10. A holding company was setup by Tata in Singapore to acquire Corus. Idea was to have all foreign acquisitions under one holding company. Singapore has a favorable Tax jurisdiction and gave Tata Steel an easy avenue for raising global resources and funds The Tata-Corus Deal Investment Vehicle

11. The Tata-Corus Deal Tata Steel India Tata Steel Holdings Asia (Singapore) Tata Steel UK (SPV) Corus Group Ltd. (UK)

12. Appointing Advisors Negotiating Terms Due Diligence Exchange of contracts Completion The Tata-Corus Deal Process of Acquisition

13. Ratan Tata – Chairman of Tata Steel on Acquisition “This proposed 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.”

14. Course : SML730 Organisation Management DMS, IIT Delhi Was The Merger a Success or a Failure?

15. The following points can be attributed: TATA Steel Group rose to 5 th position from 56 th The production capacity increased from 4million tonnes to 28million tonnes by 2011 Standard & Poor’s Rating cut it credit Rating to BB from BBB and removed them from the negative watch list Merger – Success or Failure?

16. The 150 year old Redcar plant was to be mothballed costing 1700 jobs – May 2009 The deal led by Italian steel specialist Marcegaglia had fallen; which promised to buy around 78% of Redcar’s production The reason attributed to this is unprecedented fall in demand due to recession in Steel industry Union Problems at Redcar’s Teeside Plant

17. Course : SML730 Organisation Management DMS, IIT Delhi Reasons for Success or Failure?

18. Aerospace Automotive Construction Consumer Products Defense & Security Energy & Power Lifting & Excavation Packaging Rail Success - Corus’ Diversified Presence The 2 nd largest Company of Britain and one of the flagship companies of the Britain’s infrastructure industry

19. Strong Research & Development Unit Several Patent’s to its credit Produces high end steel Large Customer base Success - Corus’ R&D Unit

20. Big boost to the Indian economy, as TATA was acquiring a company 3 times its size The R&D Unit of Corus complements that of TATA’s Links low cost Indian production and raw materials and growth markets to high margin markets and high technology in the West Help from financing institutions as $8 billion was raised through debt TATA’s Implementation of the Deal

21. Tata Steel Stock Price Statistics

22. Tata Steel Europe Stock Price Statistics

23. Net debt fell from $10.43 billion in June, 2010 to $9.13 billion in March, 2011 Tata Steel Group recorded profit after tax of Rs5,347 crores in Q1 FY’12, almost three times the profit of Rs1,825 crores recorded in Q1 FY’11 Statistics

24. Acquisition - A SUCCESS Verdict

25. THANK YOU!