Tata Corus Acquisition and M&A
Tata Corus Acquisition and M&A
Tata Corus Acquisition and M&A
analysis
MOHIT JAGGI , TANU SHREE ,AGNES ,NARAINS SINGH
SAURABH PALIWAL
Content
Tata Steel was founded in 1907, and the plant started production in
1912
One of Lowest cost of production of steel due to use to its ownership of
raw materials (coal and iron),
Why Tata wanted to acquire Corus
Access to high premium European market
Leverage low steel cost production in India
Helped to feature in top 10 players in the world.
Lower Risk Compared To Developing New Products.
CORUS holds number of patents and R&D facilities
Strong momentum of steel industry consolidation (12 Mega merger
from 2004 to 2007)
Upward trend in steel prize after 2004 and strong forecast for steel
demand with .
cost of a greenfield entity would be in the region of $1200-1300
against enterprise value paid to Corus of $ 700 to 800
Why Cours wanted to be acquired
Final negotiated price was 33% higher than the original price
Terms of the transaction
steel UK
Asia Pvt
Group
Corus
Steel
SGPR
Steel
Tata
Tata
Tata
Ltd
Tata Corous was all cash Deal and a case
of leveraged buyout.
The Acquisition was proposed to be made
by Tata Steel U.K., a wholly-owned
indirect subsidiary of Tata Steel which
was incorporated in the United Kingdom
for the purpose of completing the
Acquisition
Market reaction
Impact of buyers Financial
Tata Steel, is focusing inward (domestic market ) now, more than 10 years after it made bought UK-based
steelmaker Corus.
It finalized of the joint venture with Thyssenkrup AG to sell off corus which marks the end of a long, painful
chapter in Tata Steel Ltd.’s contemporary history.
Corus added over $6 billion in debt at Tata Steel and cost India’s largest private sector steel company its
financial health and leadership in the home market.
Competitor JSW Steel Ltd. stole a march over the Tata company expanding capacity to 18 mtpa versus Tata
Steel’s 13 mtpa.
Tata now hopes to win back the number one spot with its almost complete acquisition of Bhushan Steel Ltd. (5.6
mtpa).